What is a County Court Judgment (CCJ)

If a company owes money which it is unwilling or unable to pay the creditor can apply for a County Court Judgment (CCJ). If the Court agrees with the creditor’s claim they will issue the Judgment. The company is then required to pay the debt.

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What does getting a CCJ mean?

Once a County Court Judgment has been issued the Court orders the associated debt to be paid. Payment will be required either in a single lump sum or by instalments. Normally instalments will be allowed if the company has been able to show that it cannot afford to pay the debt immediately.

The fact that a CCJ has been issued increases financial pressure on the company. If it is not paid it may pave the way for the creditor to take further legal action. Ultimately this could result in a Winding Up Petition being issued.

Does a CCJ mean the Company is insolvent?

If a company is issued with a County Court Judgment this in itself does not mean it is insolvent. A creditor will apply to the Court for the Judgment because of a debt it believes is outstanding. However the fact that the debt has not been paid is not proof of the company’s insolvency.

It is possible that the company is in dispute with a supplier about the nature of a debt. The supplier can still try to enforce what it believes is owed with a CCJ. If the company does not respond correctly to the Court the Judgement will be issued regardless. The company may then decide to pay the debt or continue to fight the claim.

If a company is struggling to repay its debts it is likely that creditors will start to apply for CCJs against it. As such being issued with a Judgment is one indicator that the company may have financial difficulties.

How is a CCJ issued?

Before a County Court Judgment is issued the Court will review the creditor’s claim for payment. If the application has been correctly completed and seems valid notice of the application will be forwarded to the company.

If the company agrees with the debt it must complete an Admission form. This gives it the opportunity to agree to pay the debt in full or make a proposal for reasonable repayment instalments. If the creditor disagrees with the instalments proposed there will be a court hearing. A Judge will then decide how the debt is to be paid.

If the company disputes the debt it must submit a defence of why it believes it is not valid. The Court will then decide whether the claim should be upheld, partially upheld or thrown out.

It is important to respond to a CCJ claim correctly and on time. If you do not do this it is almost certain that the Judgment will be issued against the company. Immediate repayment of the debt will then be required.

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