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My company cannot afford to pay a CCJ, what can I do?


What is a county court judgement? (CCJ)

If a company owes money to one of its creditors which it is unwilling or unable to pay, the creditor can apply to the court for a county court judgement (CCJ). A CCJ is a court order demanding that the outstanding debt is paid.

A CCJ can demand that the company pay its outstanding debt either by instalments or through a single one off payment.

Even though a CCJ has been issued, this does not automatically enable the creditor to force the company to pay its debt. However, the issuing of a CCJ and subsequent actions if the debt remains unpaid can have serious consequences for the business.

What are the effects of a CCJ?

Credit rating effected – Once a CCJ has been issued, this will be advertised in the Stubbs Gazette. It will then be recorded against the company’s credit file which will make borrowing in the future more difficult.

Buying decisions influenced – A new customer’s buying decision may be influenced of they believe that the company is in financial difficulty. Other companies may prefer not to trade with a business they perceive to be financially unstable.

If a CCJ is not paid, this may trigger the creditor to apply for a winding up petition to close the company. The court will resist issuing a winding up petition unless all other avenues of debt collection have been exhausted. Non payment of a CCJ will strengthen the creditor’s arguments in this regard.

How can I stop the effect of a CCJ

Clearly the best way to avoid the effects of a count court judgement is to pay the debt owed before the creditor makes an application at court.

My company cannot afford to pay a CCJ, what can I do?

If your company has debts which it is unable to pay, it is likely that it will receive a CCJ. Ignoring such action will affect the business’ credit rating and may lead to a winding up order.

A County Court Judgement (CCJ) is a court order to pay an outstanding debt.

If you receive a CCJ, the creditor you owe money too still cannot force you to make a payment. Nevertheless, the judgement will be recorded on the company’s credit file.

This will highlight a potential cash flow problem to anyone undertaking a credit check on the business thus raising a question as to whether to trade with the company.

In addition, if a CCJ remains unpaid, the company is deemed unable to pay its debts thus clearing the way for a creditor to issue a winding up petition against the business.

Respond to the creditor’s claim

If you receive a county court claim form from a creditor’s solicitor, you should respond to this straight away.

If you are unable to pay in full, then it is likely that a CCJ will be issued. However, you should still make an offer of staged payments using the admission form.

If your offer is reasonable, it will generally be endorsed by the court thus binding the creditor to accept sensible monthly payments.

Apply for an Amendment

If your company has already been issued with a CCJ the creditor can still not force payment. However, if payment is not made, you should expect further action against the business. If the debt is for more than £750, one likely outcome is that the creditor will apply for a winding up petition.

If this happens, you will generally have to make payment in full or risk your company being closed. As such, it is sensible to make arrangements with the creditor to pay the CCJ.

If you cannot agree a sensible payment plan directly with the creditor, you can apply to the Court for a formal amendment to the terms of the CCJ. To do this you will need to use an amendment form N245 which can be obtained from the courts service web site.

Tackle all of your debts

If you are unable to pay the outstanding CCJ because of the weight of other company debts, you should consider a company debt solution. If you believe that the business has a future, a Company Voluntary Arrangement (CVA) or a Pre Pack could be the answer.

Both these solutions will help the business write off debt and continue to trade with minimal disruption.

If you feel that the best solution may be to close the business, you cannot just walk away. Liquidating the company properly will protect the interests of the directors and avoid possible personal liability for the company’s debts.

To implement any of these solutions, you should get the advice of a company insolvency expert as soon as possible.

In today’s difficult economic conditions, the possibility of your business receiving a County Court Judgement because of debt which it cannot pay is increasingly likely. It is very important not to ignore this action.

The impact of a CCJ will be to make trading more difficult for the business and could result in more drastic action against the company such as a winding up petition.

The best first step is always to try and agree a sensible payment plan with the creditor. However, where this is not successful, you should not delay in taking further expert advice to discuss the alternative solutions available.

Where to start

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If your company is facing a wider financial problem you should consider implementing a company debt management solution:

  • Pre Pack Administration
  • Company Voluntary Arrangement
  • Administration

These solutions will stop the company’s creditors applying for new CCJs against it and will overturn any judgments currently in place.

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