How Long Does a CCJ Last?

Updated: January 2022

CCJs in 2021 have surged  with a record quarterly rise of nearly 82,000 judgments in Q1. The financial crisis alongside the pandemic has upended income sources for many so it’s important to educate yourself on how to address this important financial issue. Financial experts attribute the general rise in CCJs to increased use of payday loans, zero-hour contracts, unstable loans, increasing rent prices and defaults due to unpaid mobile contracts. Most people don’t realize that mobile contracts are a debt that they can default on. In fact, mobile providers have increased the rate at which they sell this type of debt to credit collectors. The number of people who receive a CCJ for £100-200 of unpaid mobile bills has recently gone up.

If you have been issued a CCJ, it is important to understand how to resolve the matter, the steps you can take to financially rebound after one and how to rebuild your credit score over time. 

What is a County Court Judgment (CCJ)?

A CCJ is a court order issued in England, Wales and Northern Ireland. In Scotland, the process differs and is called ‘enforcing debt by diligence.’ 

A CCJ is formally issued by a county court when you fail to repay debts and the creditor has taken court action. You can expect judgments to come in the post and if you receive one, the court has decided that you owe the money. Side note: It’s very important to set up mail redirection with the post every time you move to ensure you are aware of important notices like CCJs. 

The judgment will detail:

• How much money you owe
• How to settle your debt (in full or in installments)
• Deadline to pay
• Who to pay

The judgment is public record and submitted to the Register of Judgments, Orders and Fines—informing lenders that you are unable to repay a loan you have taken out. 

How Long Does a CCJ Last?

A CCJ can remain on your record for up to 6 years from the date of issue unless you pay the full amount owed within one month. A CCJ can harm your ability to obtain credit, employment and a place to live while it is actively on your report. 

The good news is the impact of a CCJ on your credit score decreases over time. That means your credit rating is likely to improve as your CCJ ages and as you manage your finances responsibly. Be sure to follow the terms and conditions of your CCJ and all other credit agreements to prevent any default on a payment.

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CCJs across the UK between 2010 and 2021

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What is the Difference Between an IVA and a CCJ?

An Individual Voluntary Arrangement (IVA) is an agreement with your creditors to pay all or a portion of your outstanding debts and is not the same as a CCJ. An IVA is set up by an insolvency practitioner, who will work out a repayment plan and divide the payments  amongst all of your creditors. The benefit of an IVA is that it prevents your creditors from taking court action against you for your debts. On the other hand, your insolvency practitioner will charge fees for setting up an IVA. These fees can be high so make sure you know how much you’ll be charged before going ahead with an IVA. Once you are accepted onto an IVA, creditors with a CCJ against you will be unable to take further action for the duration of the IVA. 

When you get an IVA, any CCJs your creditors have against you is canceled. Terms and conditions of repayment will then be included in your IVA and you will not need to make payments towards the CCJ. 

Note: Individuals who have had a CCJ or an IVA in the past year are not eligible for Pave.

4 Ways to Remove a CCJ

A CCJ can appear on credit records a couple of days after the judgment is rendered. This is why it’s critical that you review all of your options as quickly as possible. ‍

There are four options for removing a CCJ:

1. Pay the amount owed in full within one month of the judgment issue date. This is the fastest way to remove the CCJ from your records.
   
   
2. Apply to have the CCJ ‘set aside.’ This is an option if you failed to acknowledge the claim or to defend it. Examples of this include if you were not in attendance for the hearing for a legitimate reason or you did not receive the claim form in the post. If you can prove this, the judgment can be removed promptly and expunged from your credit records. Fill out Form N244 to request the judgment be ‘set aside.’ Filling out the application does not guarantee the removal of the CCJ.
   
   
3. Obtain an IVA. When you get an IVA, the CCJ is canceled and you pay the amount owed towards the IVA.
   
   
4. The final option is to wait out the CCJ for the duration of 6 years from the date of judgment. Make sure you repay the debt and the CCJ will be removed automatically when 6 years have passed.  

How to Get a Mortgage with a CCJ 

Having a CCJ, especially a recent one, indicates to lenders that you have a history of being unable or unwilling to pay back your loans on time. It is possible to get approved for a mortgage if you have a CCJ on your record, but it will negatively impact your chances. 

In order to improve your odds of securing a mortgage with a CCJ, the following are important:

• Age of the CCJ: the older it is, the better chance you have.
• If your CCJ has been paid off: you stand an even better chance if the judgment is marked “satisfied.”
• Amount owed: a lower amount owed on the CCJ is more desirable. If you owe too much, it can affect your loan-to-value ratio.
• Number of CCJs: having more than one (1) CCJ can severely limit mortgage options.
• Effects on deposit size: keep a close eye on your deposit rate. The type and age of a CCJ may change the size of expected deposit on a home purchase.

Be sure to consult with multiple lenders during the mortgage search process because qualifications vary between institutions.

How Many Points Does a CCJ Impact Your Credit Score?

The three main credit reference agencies in the UK (TransUnion, Equifax and Experian) use different formulas, criteria and scales to assign credit scores to people. Because of these differences in reporting, it’s hard to pinpoint the exact impact a CCJ can have on your credit score. 

We can say with certainty that a CCJ directly impacts your ability to obtain a mortgage, credit card or bank account in the future. For this reason, if you have a CCJ  it’s important that you formulate a plan to either have it removed or partner with a credit broker to rebuild your credit and reclaim your financial freedom. Don’t let one mistake prevent you from purchasing your first home, getting a credit card, buying a car or achieving an important life event.

Can You Get a Good Credit Score with a CCJ on Your Credit Report?

There are several ways to boost your credit score once your CCJ is closed. 

• Make sure you are registered with the electoral roll at your current address.
• Ensure repayment of your CCJ and any other credit agreements.
• Do not apply for more than one line of credit every 3 months.
  

It’s also a good idea to obtain your statutory credit report and review it for accuracy. You may learn that there are discrepancies on your credit report that need to be corrected. With some time a good credit score is well within your reach.

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