A County Court Judgment (CCJ) is a court order that can be issued against a company that has failed to pay a debt. This can significantly impact your credit rating and limit your ability to access finance. If your business has a CCJ, it can be a worrying and stressful time. However, there are steps you can take to manage the situation effectively.
Understanding the impact of a CCJ
A CCJ will appear on your business’s credit record, which can make it difficult to secure loans, credit, or favourable terms with suppliers. It remains on your credit profile for six years if not dealt with promptly, but there are ways to mitigate its impact.
Steps to take if your business has a CCJ
1. Settle the debt
If you have the funds available, the best course of action is to settle the debt in full as soon as possible. Once the debt has been paid, you can apply to have the CCJ removed from your business's record. This will improve your business credit score and make it easier to access finance in the future.
If the debt is paid within 30 days, there will be no permanent record on your business credit profile. However if you wait over the 30 day period, it will stay on your profile for 6 years, even if settled later on. Settling the debt as soon as you can will stop the long term negative effects.
2. Create a CCJ payment plan
If settling the debt in full immediately is not feasible, you can ask the court to create a payment plan. This allows you to pay off the debt in more manageable instalments.
If a payment plan is not offered, getting a business loan could be an option to pay back the debt quickly. However, if you think your business might be running into financial difficulties, taking on more debt is potentially not the best solution.
Acting quickly is key, so make sure you are keeping an eye on your credit profile to be notified of any new CCJs as soon as possible.
3. Negotiate with the creditor
If you can’t afford to pay the debt outright, negotiating with the creditor is a critical step. Demonstrating your willingness to pay can often lead to a mutually agreeable payment plan. In some cases, the creditor may even agree to withdraw the CCJ if you reach a satisfactory agreement. Keeping communication lines open and updating the creditor on any changes in your financial situation can facilitate a more favourable outcome.
4. Apply to have the CCJ set aside
If you believe that the CCJ was issued unfairly, you can apply to have it set aside. This means that the CCJ will be cancelled and the case will be heard again in court. You may have grounds to have the CCJ set aside if, for example, you were not given enough time to respond to the claim or if you were not properly served with the court documents. It is important to seek legal advice if you are considering this option as it can be a complex process. You can find out more information on this process from the government website.
How long will the CCJ stay on record?
If the CCJ is satisfied within 30 days, it won’t stay on your credit report.
After the 30 day period, a CCJ will last on your credit report for six years. After six years from the date of judgement, it will be automatically removed from your business credit profile, regardless of whether it is paid or unpaid.
Tips to prevent future CCJs
Taking proactive steps can help prevent future County Court Judgments (CCJs) and ensure your business remains financially stable.
- Keep detailed records of all financial transactions, communications with creditors, and payment schedules. This helps in managing your debts effectively and can be crucial if any disputes arise.
- Regularly forecast your cash flow to identify potential issues early and take timely action. This proactive approach ensures you have enough liquidity to cover expenses, helping you avoid falling behind on payments and reducing the risk of accruing debt.
- Maintain a strong credit control process to manage customer payments and credit terms effectively. Start by credit checking customers before extending credit to assess their ability to pay. You can then implement a clear and structured process for following up on overdue invoices. This reduces the risk of late payments, so that you have the cash to meet your own obligations.
- Developing strong relationships with your suppliers can result in more favourable payment terms and flexibility in times of financial strain. Open and honest communication can go a long way in securing support when needed.
If your business has a CCJ registered against it, it’s important to act quickly to minimise the impact. You can stay up to date with your credit profile and see if a CCJ has been registered against your business when you sign up to Capitalise for Business. This ensures that you can take action quickly with real-time alerts.
Taking proactive steps and seeking professional advice can help you navigate this challenging situation and work towards improving your business’s financial health.
