Why would a company be issued a CCJ?
A company that owes money to a creditor may be issued with a County Court Judgement (CCJ). A CCJ rarely comes out of the blue. A creditor who is owed money by a company will usually have tried numerous times to recover their debt. A CCJ is often the last step a creditor will take to retrieve their debt, and they must apply to the court to issue the claim.
What are the consequences of a CCJ?
First and foremost, a CCJ will reflect badly on a company’s credit rating. This can be detrimental to any future loans, lines of credit and supplier contracts. For directors who have provided a personal guarantee to obtain credit, their personal credit rating could also be affected.
A CCJ could also result in the company being issued with a winding up petition if the debt is more than £750. If this happens, it can be proven that the company is insolvent and end up with the company being liquidated.
Can a CCJ be removed?
It is possible to have a CCJ against a company removed.
Pay the CCJ in full within a month
This will result in the details of the county court judgement being completely removed from the register.
Pay the CCJ later
If you cannot pay straight away you can defer payments or pay in instalments. Once you have done this you can get a ‘certificate of satisfaction’, in which case the CCJ stays on the register but is marked as satisfied. This means that anyone who checks it will know that you have paid what you owe.
Judgement set aside
In some cases, you can apply for the judgement to be set aside.
Wait six years
The register holds details of CCJs for six years. After this time the details will be removed from the register.
Dispute the amount owed
If you believe the amount your creditors claim you owe is wrong you can return the Defence Form to the court outlining your argument. You can also request more time if you submit an ‘Acknowledgement of Service’ form.
You can claim against your creditor if you believe it is in fact you who is owed money. In this instance you can fill out a counterclaim form. However, this may require a fee.
How to avoid a CCJ against your company
Once you have received a court claim, you have 14 days to respond by filling it in and returning the necessary paperwork. The claim gives your company the chance to pay the debt back in full, request more time to pay or appeal the judgement and provide information to support this.
If you don’t respond within this 14 day period, the CCJ will be issued as a default judgement by the court and it will be marked on your company’s credit report.
You can try to avoid a CCJ being issued against your company by taking steps to resolve your creditor debts and cashflow issues before they become a problem. If your business debts have got out of control, you should seek professional help straight away.
A Licensed Insolvency Practitioner will be able to advise you on the options available to you and your company.
One solution could be a Creditors’ Voluntary Liquidation (CVL).
Alternatively, a Company Voluntary Arrangement (CVA) could be a better option for you – especially if you believe that you could work out a legally-binding agreement to repay your debts over a set period of time.
What to do now?
Contact Clarke Bell for your free advice to determine what is the best way for you to deal with your company’s situation.