If you’ve received a County Court Judgement (CCJ) against your business (or if you’re a sole trader against you) then you might be concerned, worried or even frightened. 

Don’t panic – while it has to be taken seriously and dealt with quickly and properly, there are some steps you can take immediately to give you some peace of mind and time.

What is a CCJ?

A County Court Judgement (or a Decree under Scottish law) is precisely that. 

One of the local courts in the UK has found that you legally owe a debt to a creditor and that it has to be repaid, usually within 30 days of the judgement being awarded. 

If it isn’t repaid or an alternative arrangement reached with the creditor then there are several negative consequences that you could incur:-

  • Bailiffs – If unpaid the next step would be for the creditor or the court to use bailiffs (or High Court Enforcement Officers) to physically visit your property and seize assets equal to the amount of the debt. This route could also mean that ultimately the business would be wound-up and closed by the court.
  • Credit – A CCJ on file will significantly impact a company’s credit rating which will make it more difficult and expensive to secure loans, funding or better terms from your suppliers. A CCJ will also remain on a company’s credit file for at least six years.
  • Reputation – CCJ’s are made public and publicised in local media and online. Negative publicity can harm your business and personal reputation making it harder to attract new customers and retain existing ones.
  • Liability – If you’ve given personal guarantees against a business loan or other lending then a CCJ will put your personal assets at risk. For a sole trader, this is a big threat as any business debts would be expected to be settled from personal financial assets even if no personal guarantees are given.
  • Insolvency – Research has shown that there is a higher probability of a business going into insolvency and liquidation within two years of receiving a CCJ.   

What to do if you receive a CCJ

Firstly, and it bears repeating, don’t panic. 

Stressful conditions don’t aid good decisions so once you understand what a CCJ is and what it means, it’s time to consider your next steps – and there are some options available for you.

Pay the debt fully within 30 days

Once you receive the CCJ then the clock is ticking. 

If you can repay the debt, fully and completely within 30 days of the date on the judgement then this will be the best outcome as the judgement will be removed from the court’s records, there will be no negative effect on your company credit rating, the creditor has been paid and the debt has been settled. 

Pay the debt fully after 30 days

Paying in full after the judgement date or in instalments over a long period will settle the debt but will incur some negative consequences. 

The CCJ will appear on the company’s credit file for six years but will be marked as satisfied which is better than unpaid. This could still have negative implications for future funding but after six years from the date it will be removed.

Cancel the CCJ

In the rare circumstance that you don’t believe you owe the debt, or if you have already paid the creditor in full then you can apply to the court to have the CCJ cancelled or “set aside”. 

This is not a scheme to avoid payment. There are few acceptable reasons a court would consider and these would have to be made in person at a court hearing to explain fully the circumstances.  

Non payment

Ignoring or refusing to pay a CCJ is an option but possibly one of the worst you could take personally and professionally. 

It would inevitably and quickly lead to bailiff action and seizure of assets to cover both the value of the debt and the fees the bailiffs have incurred. The court would also implement a compulsory liquidation process involving a winding up petition to close the business down, force the sale of assets to repay debts and launch an Insolvency Service investigation into directors actions which can lead to fines, suspension and in the most serious cases – imprisonment. 

Chris Horner is the insolvency director of BusinessRescueExpert and has worked with many businesses and directors that have received CCJs.

He said: “It’s not fatal for a business to get a CCJ against it but you don’t want one. Statistics and research have proven that it’s a reliable indicator of insolvency if they don’t take action and quickly. 

“Think of it as the last stop before the terminus.

“Depending on the individual financial circumstances of a company, they might have more options to act on than they think. 

“Repayment is the optimum solution but administration, a CVA or voluntary liquidation could also all be the right fit. 

“We’ll be happy to work with you to create the most efficient and effective plan to deal with the CCJ and any other financial problems or arrears you have including outstanding bounce back loans, but only if you reach out at the earliest opportunity. 

“Time really is of the essence so make the most of it and get in touch for a free call today.”