The clock is ticking…

Receiving a County Court Judgement (CCJ) in the post is rightfully a moment of dread for any business owner or director. 

As well as being a formal declaration from a court that the company owes a debt to creditors, it’s a literal judgement on the business and its management. But it doesn’t necessarily have to mean the end of that company – the outcome can rest on one thing – the date on the CCJ. 

Your next reaction will help determine whether this judgement goes away and disappears as if it never happened or if your business’s credit rating is going to be negatively affected for the next six years.

The Golden Rule: Do Not Ignore It

The most dangerous reaction to a CCJ is burying your head in the sand. Ignoring the judgement will not make it vanish; it will only accelerate enforcement action.

Once a CCJ is declared valid and unpaid, creditors can escalate the situation. 

They can force your business bank accounts to be frozen, making trading impossible or instruct bailiffs and High Court Enforcement Officers (HCEOs) to visit your premises to seize goods and assets.

By taking action immediately, you will utilize the critical 30-day window.

The 30-Day Lifeline provided by judgement

Once a judgement has been reached, it provides a specific, 30-day grace period that gives you time to act.

If you are able to repay the debt in full (including costs) within 30 days of the judgement date then the CCJ is removed from the public register entirely, leaving your credit rating intact.

After the 30 days are up, even if you repay the debt, the CCJ will remain on your company’s credit file for six years. It will be marked as “satisfied” – which is better than “unsatisfied” – but will still signal to lenders and suppliers that your business has struggled potentially making future credit difficult and/or more expensive to obtain.

Immediate next steps

Once the date has been verified then you realistically have three options:

  • Pay in full – This is the “clean slate” method. If you’re able to pay from existing funds or finance options, paying the full owed amount immediately is the best outcome all round. It clears the debt, satisfies creditors and keeps your company credit record clean with the judgement deleted from court records. 
  • Negotiate more Time to Pay – If you acknowledge the debt is legitimate but cannot pay the lump sum instantly, you must not ignore the court. You can apply for a “stay of execution” and propose a repayment plan. This involves submitting Form N245 to the court which requires a transparent and honest breakdown of your company’s income and expenditure to prove what you can realistically afford to pay monthly.
  • Disputing the debt – if the CCJ has been issued in error – if you have already paid it, if the amount is wrong or you didn’t receive the original claim forms – you have the legal right to challenge it. You must apply to the court using Form N244 to ask for the judgement to be set aside. This will require compelling evidence including receipts and/or correspondence to back this claim up.

A word of warning on personal liability

While limited liability usually protects directors’ personal assets, there may ultimately be some exposure if you’ve signed personal guarantees. While a CCJ against a business doesn’t typically damage personal credit ratings, lenders can bypass company structure and pursue you personally for those debts.

A CCJ can often be a “canary in a coal mine” regarding financial distress for businesses.

More than one-in-three (35%) of companies go on to become insolvent after receiving just one County Court Judgement against them.

If you have received one or are worried about the future of your business then get in touch with us today. 

The sooner you can chat to one of our advisors, initially for free, the more options you will have to help you and your business.