The blight of county court judgments
Equifax warns of the devastating impact of an unknown County Court Judgment on your credit report
Worrying media reports* have been published this week highlighting how people have been declined mortgages because they weren’t aware that a County Court Judgment (CCJ) had been issued against their name to recover an outstanding debt. The court order letter had been sent to an old address, which means those affected were unable to appeal. Equifax is reminding people to check their credit report ahead of applying for any form of credit so they are aware of the information currently held on their credit report.
“The cases highlighted in the report are extremely concerning. Being declined a mortgage at the last minute and losing your future home is devastating,” says Lisa Hardstaff, Equifax credit information expert. “Many of the people affected were not aware of the CCJ in the first place because the court order letters had been sent to the wrong address. When moving address it is vital that utility accounts are closed and the final bill paid. If you have credit cards or any form of financial agreement make sure you provide your new address to the lender as any unpaid debt could result in a CCJ, even if the correspondence is going to an old address. One way to ensure bills or financial statements don’t go astray is to set up a mail redirection with the Royal Mail.
“Once a CCJ is enforced it will stay on a person’s credit report for six years if not paid off in full within 30 days of receiving it. If the individual repays the money within the 6 years, the CCJ will be marked as satisfied. As lenders may look at how you have managed credit agreements in the past when making a decision about offering new credit, a CCJ on your credit report could indicate that you have been unable to manage your debts and you may struggle with repayments.
“The best way to avoid receiving a CCJ is to make repayments on owed money in full and on time every month. This type of credit history can indicate to lenders that you are financially responsible and may even improve the credit score they give you. We would also suggest getting a copy of your credit report 3 – 6 months in advance of applying for any form of credit to avoid any delays in the loan being approved,” concludes Lisa Hardstaff.
The Equifax Credit Report is accessible for 30 days free simply by logging onto www.equifax.co.uk/Products/credit/credit-score. If customers do not cancel before the end of the 30 Day Free Trial, the service will continue at £14.95 per month, giving them unlimited online access to their credit information and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file simply and quickly.
Understanding County Court Judgments
A County Court Judgment (CCJ) is a court order that can be issued against a borrower’s name if they fail to make repayments on a debt. They are used by creditors to reclaim the money owed, and can only be issued in England, Wales, and Northern Ireland– Scotland uses a different method called enforcing a debt diligence. When someone is unable to keep up with repayments on money they owe, or they have not reached an arrangement with their creditors to make up the missed payments, they could receive a County Court Judgment. A CCJ for credit agreements under the Consumer Credit Act must be preceded by a warning letter, such as a default notice or a letter before action, at least 14 days before any action is taken. The letter usually outlines steps the borrower can take to resolve the issue, and what could happen if it is left unresolved.
What Can I Do?
The warning letter should include information about what you can do to resolve the issue and what may happen if you don’t. When issued with a warning letter the recipient normally has two weeks to respond – during this time it can help to seek financial advice to tell you the appropriate course of action.
You should also attempt to reach an agreement with the creditors during the two weeks - if you ignore the warning, the CCJ will still be issued but the court won’t have heard your side.
When issued with a judgment you normally have two weeks to respond, in which you can either dispute the decision or admit the claim. If you are disputing the claim it may help to seek a financial advisor to help with the process, while if you admit the claim you should fill out an N9A admission form to provide details of income and expenditure, and an offer to repay the debt.
If the offer is accepted, the court should send a Judgment setting out the rate at which you’ll make the repayments. If the offer is rejected, the court will send a Judgment telling you how much you should pay as well as the rate you should pay at.
In cases where you cannot reasonably expect to afford the amount set out in the Judgment, you can ask for a redetermination. This is where the court will re-evaluate your case before making a decision. Applying for a redetermination involves sending a letter to the County Court outlining why you are unable to make the payments, with financial evidence to support the claim.
Receiving a CCJ can be alarming, but responding quickly to the claim form may help resolve the situation.
What Happens Next?
If the borrower does not or cannot stick to the terms of the CCJ agreement, the creditor can ask the court to take further action:
Warrant of Execution – The creditor can ask the court to send bailiffs to collect either the owed money or any goods that could be sold to make up the money. The court will issue a Warrant of Execution to allow this to happen, however you can appeal for the court to stop the Warrant and allow you to repay the debt at a rate you can afford.
Attachment of Earnings – The creditor can also ask for the owed money to be taken directly from your wages, known as an Attachment of Earnings Order.
Charging Order – The debt may be secured against property you own, which could mean if you miss too many repayments they could seize the property to make up the money owed.
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