A County Court Judgment (CCJ) is one way that a creditor can enforce the payment of a company debt. Once a CCJ is issued there is increased pressure for the debt to be paid. If payment is not forthcoming the creditor can then apply to use bailiffs or to Wind up the company.
- What are the affects of a Company CCJ?
- How to respond to a CCJ claim
- Can interest be added to a Company CCJ?
- Options if a Company CCJ cannot be paid
Has your company received a CCJ? Give us a call (0800 180 8440) or complete the form below to speak to one of our experts
The Affects of a Company CCJ
The main affect of a County Court Judgment (CCJ) is to apply pressure on a company to pay a debt it owes. However there are some additional unpleasant side effects. The main issue if that the company credit rating will be damaged.
Once a CCJ is issued it is recorded both against the company’s credit file and in the Stubbs Gazette. This will negatively affect its credit rating. As a result it will much more difficult for the company to borrow in the future both from the bank and trade suppliers.
In addition the bank may become concerned as to whether the company is still viable. This could prompt it to withdraw overdraft or credit card facilities. In addition potential new customers might question the financial stability of the company and chose to place their business elsewhere.
How to respond to a Company CCJ claim
If your company receives a County Court Judgment (CCJ) claim form it should not be ignored. There are different ways you can respond.
If you believe that the company does owe the debt you should respond suggesting a sensible repayment plan. If you disagree with the claim you can do so. A date will then be set for a hearing at Court where your arguments can be presented.
You should not simply ignore the claim. If you do a CCJ will be issued against your company. This will normally for the full amount of the debt plus interest and costs. The order will be due for payment immediately and your credit rating will be affected.
How to prevent a Company CCJ
The best way to try to prevent your company getting a County Court Judgment is to pay the debt owed. If you cannot do this then you should try to agree a sensible repayment offer with the creditor.
However if your business has multiple debts which cannot be paid negotiating with them can be extremely difficult and time consuming. You should then get expert advice and consider implementing a company debt solution.
Can Interest be added to a Company CCJ?
Whether interest can be added to a debt after a County Court Judgment has been issued depends on the type of debt. Generally speaking of the Judgment debt is less than £5000 additional interest cannot be added.
It is important to remember that company loans and credit cards are not consumer credit agreements. As such they are not covered by the Consumer Credit Act rules. as such if a CCJ is issued for a debt greater than £5000 interest can be added.
Options if a Company CCJ cannot be paid
If your company has received a CCJ which it simply cannot pay there are a number of things you can do. At this stage it is still not to late to try and negotiate an affordable repayment plan. This can be done either directly with the creditor. However more often it is done by making an application to the Court.
Alternatively you could consider implementing a company debt solution. If suitable the company can apply for a CVA. Once in place any CCJs will be overturned and creditors can no longer apply for new CCJs against the company.
Alternatively in Pre Pack Liquidation any CCJ debts will be written off. A new company can be formed that starts trading in place of the old debt free.