What you need to know – right now – if your business has received a County Court Judgement

A CCJ can be a stressful and daunting experience, especially if it’s unexpected. 

A formal declaration from a court that you owe a debt and the serious repercussions for your company’s financial health and credit rating that follow are not to be taken lightly. 

Fortunately getting a CCJ is not the end of the road. Taking prompt and appropriate action can prevent it from escalating and also have it removed from any permanent record if you follow these essential steps to stop a CCJ from proceeding. 

Time is of the essence

The first and most important step when dealing with a CCJ is to act quickly. 

Ignoring the judgement will only worsen a situation, leading to enforcement actions such as bailiffs or High Court Enforcement Officers visiting your premises to remove equipment and goods or the freezing of your business bank accounts – making trading almost impossible. 

Once a business receives a CCJ and it’s valid then there is usually a limited window of 30 days to act from the date of the judgement. Choosing your next step within this timeframe is the key to protecting your business. 

Option 1: Pay the debt in full

If you can repay the debt completely within 30 days then this will be the best outcome all round. The debt is cleared for good, the creditor has been paid and relations may be restored/resume, there is no negative effect on the company’s credit rating and the judgement is removed from the court’s records. 

Option 2: Acknowledge the debt and seek time to pay it

If the debt is legitimate, you agree that you owe it but you are unable to pay it all off in full then you can apply for a temporary “stay”. 

This will halt the CCJ temporarily giving you the necessary room to negotiate and arrange a realistic and manageable repayment plan with the creditors. 

In order to apply, the owner or director will need to complete and submit Form N245 to the court in reasonable time. This requires a detailed breakdown of the company’s income and expenditure to demonstrate what can realistically be afforded in monthly repayments. It’s vital to be transparent and accurate in these financial disclosures as this will increase the likelihood of the proposed payment plan being accepted by creditors. 

An alternative route would be to negotiate an informal agreement directly with the creditor and High Court Enforcement Officers, which would avoid the formal court process and could be more flexible but would have to be clear from the outset and good communications maintained throughout. 

If the debt is repaid through this method then the CCJ will appear on the company’s credit file for six years but will be marked as satisfied which is a lot better than being unpaid.  While this may still have negative implications for future funding, it is removed six years from the date of entry.

Option 3: Dispute the debt because you believe the CCJ to be incorrect

If you have reason to believe that the CCJ has been issued in error – either the amount being claimed is incorrect, the debt is already paid or there is another valid reason for not owing the money – then you have the legal right to challenge it. 

To do this you have to apply to the same court that issued the CCJ using Form N244. 

This application allows you to ask the court to “set aside” the judgement but you will have to provide a compelling reason for doing so with supporting evidence. This can include bank statements, receipts, correspondence with the creditors or any other documentation that strengthens the case. 

If filing Form N244, then it’s sensible to request an interim “stay” to prevent any enforcement action from being taken against the business while the court considers the application. 

What happens next?

  • If your payment plan is accepted

The most important thing is to ensure that you make the agreed payments on time, every month. Any missed payments can result in the stay being lifted and enforcement action resuming so if you think you are in danger of missing any, get in touch with your creditors and the court as soon as you can to explain.

  • If your CCJ challenge is successful

The court may set aside the current CCJ and a new hearing will be scheduled to determine the validity of the debt. If you win this subsequent hearing then the CCJ will be removed from your record as if it never existed. 

  • If your CCJ challenge fails 

If you’re unable to stop the CCJ and cannot afford to pay the debt then it’s time to consider formal insolvency options such as administration, a Company Voluntary Arrangement (CVA) or a Creditors’ Voluntary Liquidation (CVL). These various options provide legal protection from creditors including CCJs and offer a structured and efficient way to deal with your company’s financial difficulties.

A CCJ is a serious matter – serious enough to mean the potential closure of your business but it’s not an insurmountable obstacle. 

One of the best ways of understanding your options and what action you can take is by getting in touch with us. 

We offer a free initial consultation to any business owner or director who needs to know how to effectively manage their situation and protect the future of their business. 

No matter what issues you face now and in the future, being proactive and seeking out professional, impartial advice is always the best first step.