debt collection uk laws

THE CCJ PROCESS - If a creditor wants to apply for a CCJ against you, then they will have to employ a solicitor. The solicitor must give you the opportunity to inform the Court of your side of the story, present the reasons why you can not afford to pay your debt and make a reasonable offer based on your monthly income and expenditure.

The solicitor will forward to you some official documents which you must complete and return. These documents are very easily identified because they are blue in colour. If you receive these forms, you must normally complete and return them within 14 days of receipt.

You will first be given the opportunity to confirm the debt that you owe. You are then given the opportunity to tell the court about your income and expenditure. If your expenditures are reasonable you will be able to show that you do not have enough money each month to pay your creditors. You will have the opportunity to say what you think you can afford to pay. Do not worry if you think that this is only a very small amount (even as low as £1 per month). If this is reasonably all you can afford, the Court will force the creditor to accept such a payment.

After the Court has decided what it thinks it is reasonable for you to pay, it will make its judgement and the CCJ will be put in place. You will be informed of the judgement by post.

Once made, you are given 30 days to repay the debt in full. If this is not achieved, the CCJ will remain until the debt is repaid in full. As long as you comply with the payment terms of the CCJ, your creditor must cease all additional interest and late payment charges.

The Court is There to Help - Remember, if you really have no available money to give to your creditor each month, the Court cannot get “blood out of a stone”. They will make the judgement based on what you can reasonable afford.

If a CCJ is put in place by the Court and you stick to its payment terms, then the creditor is unable to take any further action to recover the debt directly from you. In addition, the creditor is legally obliged to freeze further interest or account charges.

As such, in many cases, if a creditor threatens you with court action and a CCJ, this is actually to be welcomed as a sensible way to agree an affordable repayment plan.

WHAT HAPPENS IF I IGNORE CCJ DOCUMENTS - You must not ignore CCJ documents if they are sent to you. If you fail to complete and return them in the allotted time period, you will loose your opportunity to tell the Court your side of the story and make a suggestion about what you can afford to pay.

If you do not complete the documents and give the Court any information about your circumstances, then all the Court can do is make a best guess about what you can afford to pay. It will be impossible for them to do this accurately and so they are likely to make a judgement for you to pay more than you can afford. This will then be no advantage to you at all as in all likelihood, you will not be able to pay the CCJ.

WHAT HAPPENS IF I DO NOT PAY MY CCJ? - If the debt still remains outstanding, the creditor can go back to the Court and request the court to undertake an attachment of earnings. This means that your employer will be asked to deduct the amount prescribed by the judgement from your wages to enforce payment.

HOW WILL A CCJ EFFECT ME? - Once in place, a CCJ will remain until the debt is repaid. It will be recorded on your credit file for 6 years from the date of the CCJ being issued (or longer if it takes longer to repay your debt or settle it in full) . This will make it difficult for you to obtain further unsecured credit such as personal loans and credit cards during this time.

If you have a CCJ, you will still be able to take a new mortgage. However, you will need specialist advice and you may not be able to get the best mortgage rate available on the high street.

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