Written ByRobert Moore
Marketing Manager
Rob has over a decade of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.
Rob is now working with the Board at RMT KSA to develop strategic marketing programmes to support the business plan and drive more company rescues.
When a creditor is not paid they may seek to get a County Court Judgement (CCJ), issued from the Court. This can be against an individual or a company.
Receiving a CCJ can be quite damaging if it is not managed and dealt with correctly. The judgment needs to be removed from the company’s or your credit rating as soon as possible. If it is not removed, this will act as a barrier in the future, affecting you or your company in many ways, including when you wish to borrow money and when seeking employment opportunities. Therefore, this simple page indicates the three ways you can get a CCJ removed:
CCJs appear on credit records usually within just a few days of the judgment, however, if you act fast enough and the debt is paid within the month, in full, the judgment can be removed from the register. If the Court are aware of this, then they will act as if no register was issued in the first place. However, it is the responsibility of the creditor that has been paid to inform the Court – if they do not do this, then the Court will be none the wiser, and the CCJ will remain. A tip for you is to ask the creditor, once the debt is settled, if they have informed the Court – if not you can take action yourself and do so. Proof of Payment is required as is a £15 fee for the process.
If the CCJ is paid at a later date instead, you can get a certificate of satisfaction, classing the CCJ as satisfied on the public register – it has been paid, despite not being on time. However, the settled debt does not remove the CCJ, thus it remains on your credit record – the benefit being that it just makes it slightly easier to obtain credit. Unpaid CCJs are shown as unsatisfied, hence suggesting a poor credit record
From the date of the judgment, the CCJ remains on the register for a period of 6 years. Once the six years have passed, the judgment is automatically removed from your credit record – even if it is not paid.
This may sound appealing, letting the CCJ die out, but do you really want to have a poor credit rating behind you for six years? Consider the consequences, can you afford the risk?
If the CCJ is a default judgment, i.e. the defendant does not acknowledge the claim or defend it, it can be set aside. If you reply to the claim, admit to the debt or attended the hearing for the issuing of the judgment, then this is not a default judgment. Another way to have the CCJ set aside is to show the Court that you have a good reason to defend the claim, i.e. the claim form may have never been received or was sent to the wrong address, meaning you missed the opportunity to pay the debt within the month. If there was a good reason for you not attending the hearing, the Court can set it aside. This automatically removes the CCJ from the public register, leaving its record non-existent. To do this, you must apply to the Court and do so quickly, as soon as it has been registered against you.
If you do not act to remove the CCJ, it could lead to a winding-up petition being ordered, for debts over £750. A winding-up petition freezes all the related bank accounts and negatively affects your reputation. If this is the case, seek turnaround advice from one of our expert advisers, who can help you and discuss options you can take to save yourself and your company.
If you have an affected credit rating from a CCJ, you can be hived down or hived across to a newly formed subsidiary. This will ‘wipe the slate clean’, though it is very complex and requires guidelines to be followed. You cannot breach transaction at undervalue. Therefore, it is recommended first to take removal action.
What Is A Winding Up Petition By HMRC or Other Creditor
Learn what a winding-up petition is, when it's used, and the legal process involved. Read our comprehensive guide written by licensed insolvency practitioners
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How To Issue A Winding Up Petition Against a Debtor Company
How do I issue a winding up petition. A guide to procedure and costs of issuing a petition on a company to recover debts. When to use it and when not to.
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HMRC Bailiffs and Enforcement Officers – Can They Enter My House?
A Bailiff, HMRC officer or an Enforcement Officer has the power to take control of your goods and possessions in order to satisfy a debt.
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Secured And Unsecured Creditors – What Is The Difference?
I am confused about secured and unsecured creditors. What is the difference? As a director of a company that is doing well and making money you may have no real understanding about the important differences between certain types of creditors. The only time it really comes up is if you apply for a loan for the business and the lender talks about security and the loan being secured etc. Secured Creditors A secured creditor is a creditor that has security over an asset or assets of the company. So, if the company can't pay then they have the right to the proceeds of the sale or proceeds of the asset. This is enabled by a legal document called a charge or debenture. There are two kinds of charge; A Fixed Charge and a Floating Charge. The difference is quite hard to explain in a few words so we have a dedicated page on the differences. Have a read here on fixed and floating charges. A fixed charge is essentially a charge on a very specific asset whereas a floating charge is across a range of assets or asset that can change.A charge is a bit like a mortgage on your house. If you fail to keep up your payments then the bank can effectively force the sale of the asset and reimburse themselves. In a company situation if the secured lender is owed money then they can "force" the company into the hands of administrators who will pay them having sold the assets. This description is simplistic and is more akin to the old system of receivership but it illustrates the principal. Unsecured Creditors These are essentially creditors that have no security over the assets. This can be a trade supplier, HMRC, a utility company. Banks will often lend without security but they will charge a higher rate of interest to offset the risk they can't get their money back.Be aware though that some creditors are called secured as they have a personal guarantee from the director and they may use terminology like "secured against the directors personal assets" In insolvency law they are not secured and so come after the secured creditors that have a "charge" over the company's assets when money is paid over in the event of a terminal insolvency event like liquidation. What about defacto secured creditors? These are creditors that do not have any security over the company's assets but they have control over the company in that they can shut it down. An example might be the creditor that runs their proprietory software, or their means of payment (this happens when Amazon have lent the company money to develop their online shop) such creditors are more properly referred to as "ransom creditors". Ransom creditors are more important if the company is insolvent but could be rescued and so need to continue to trade. So they need to be kept happy!In a liquidation scenario they would be behind a secured creditor that had a charge over the stock for example.For a more detailed explanation of the priority of creditors in an insolvency situation then please look at our page on creditor priority. There is even a handy infographic on there too.
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What is an HMRC Notice Of Enforcement?
Any creditor who is owed money has the power to serve a Notice of Enforcement if they obtain a court order. HMRC or landlords do not need a court order, however they must still obey strict regulations to retrieve debt.
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