If you receive a CCJ – these will help focus your mind

Receiving a County Court Judgement (CCJ) can be a stressful and daunting experience for any business owner – especially if it’s unexpected. 

A CCJ is a formal court declaration that your business owes a debt, carrying serious repercussions for its financial health and credit rating. 

While it’s a serious matter, a CCJ is not necessarily the end of the road for the business – prompt and appropriate action can prevent escalation and may even lead to its removal from permanent records.

There are three essential steps that directors need to know if they receive a CCJ.

Act swiftly – time is critical

The most important step when it comes to dealing with CCJs is to act quickly. Ignoring the judgment will only worsen the situation, leading to increasingly severe enforcement actions. 

Typically there is a limited window of 30 days from the judgement date to respond effectively and choosing the next step within this timeframe is crucial to protecting the business. 

If the matter isn’t settled then creditors may escalate their response like bailiffs or High Court Enforcement Officers (HCEOs) visiting the business premises or home to seize equipment and goods. They could even take steps to freeze business bank accounts, making trading almost impossible.

Explore your options

You have several choices to make if faced with a verified CCJ.

  • Pay the debt in full within 30 days – Without doubt, this is the best outcome. The debt is cleared, the creditors satisfied, your company’s credit rating remains unaffected and the judgement is removed from court records. If payment in full is made after 30 days but within six years, the CCJ will still appear on your credit file but will be marked as “satisfied” rather than “unsatisfied” which could potentially still affect future funding.
  • Acknowledge the debt and negotiate a payment plan – If the debt is legitimate but you cannot pay for it all at once, you can apply for a temporary stay. This temporarily halts the CCJ process, providing room to negotiate a manageable and realistic repayment plan with creditors. Typically Form N245 is submitted to the court, detailing a company’s income and expenditure. Alternatively, you can negotiate an informal agreement directly with the creditor. 
  • Dispute the debt – if you have a material reason to believe that the CCJ is incorrect (for example – the amount claimed is wrong, the debt is already paid or there’s another valid reason for not owing the money), then you have the legal right to challenge it. This involves applying to the same court that issued the CCJ using Form N244 to ask the court to “set aside” the judgement, providing compelling reasons and supporting evidence. It’s also sensible and prudent to request an interim “stay” to prevent enforcement action while the court considers the application. A successful challenge can lead to the CCJ being removed as if it never existed. 

Understand the serious business and personal ramifications

A CCJ carries significant professional and personal implications for the business and for directors too.

  • Severe credit damage: An unpaid CCJ, or one satisfied after 30 days will appear on a company’s credit file for six years, severely impairing its credit rating. This makes securing future loans, credit or favourable supplier terms much more difficult and costly.
  • Public visibility and reputation: CCJs are publicly accessible and available to view on the Register of Judgments, Orders and Fines. This public record can damage your business’s reputation and lead suppliers to withhold further credit or demand upfront payments. 
  • Heightened insolvency risk: A CCJ is a strong indicator of financial distress and significantly increases the likelihood of insolvency. Research confirms a high correlation between CCJs and subsequent insolvency, with the average time to enter an insolvency process potentially around seven months. An unpaid CCJ can precede a winding-up petition, which, if successfully argued before a court, often leads to a forced business closure. 
  • Personal impact on directors: For limited companies, directors typically aren’t personally liable for company debts unless personal guarantees were provided for loans and wrongdoing is found. A CCJ brought against a company might indirectly impact a director’s ability to secure personal credit if personal accounts are with the same bank, due to perceived income instability. Sole traders lack limited liability and are personally responsible for outstanding debts, with High Court Enforcement Officers having the right to seize personal assets.

A financial canary in the coal mine

While a CCJ is a serious challenge to any organisation, it is manageable if dealt with promptly and professionally. 

Think of them as an early-warning system for a business’s financial health that signals proactive course corrections now to prevent further difficulties. 

We offer a free initial consultation to any director or business owner who requires one to help them navigate their options. 

Whether it’s helping you navigate your options after receiving a CCJ, from disputing factual claims to negotiating with creditors or exploring formal insolvency solutions such as administration or a CVA that offers legal protection – we can help.