Difference Between a CCJ and Bankruptcy

Talk about debt get loads of questions relating to CCJ’s and bankruptcy. Mostly concerning the difference between a CCJ and bankruptcy, this article explains CCJ’s in more detail and how they differ from bankruptcy.

What is a CCJ?

CCJ stands for “County Court Judgement”. A CCJ is when your creditor takes you to court for non-payment of debts. The purpose of a CCJ is to get you to repay any outstanding debts. Creditors or lenders can get one when your accounts go into default. For more information, please read our article on what a CCJ is.

How does my debt go into default?

If you miss a payment on a debt you owe, this debt will eventually go into default. If the lender decides you can not repay your debt, they will end their agreement with you and take further action to collect the debt.

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What is the difference between a CCJ and Bankruptcy?

Bankruptcy is when you are unable to pay and your debts are cleared as a final solution. On the other hand, a CCJ is when a creditor takes you to court for not paying your debts. Therefore your debts are not cleared with a CCJ.

It is quite possible that when you first default on a payment, a CCJ will be registered against you and this then would be included in your bankruptcy. When you go bankrupt you must stop making payments towards the CCJ, as you are no longer allowed to make payments to any unsecured creditors. Therefore this debt is written off and any unsecured creditors can not collect any further payments from you.

Please note even if a CCJ has been written off by bankruptcy, it will still remain on your credit record for 6 years. Bankruptcy will also affect your credit rating for 6 years and it will have more impact than a CCJ, as it would be the last thing recorded on your records. For more information on credit ratings, please read our article on what affects your credit ratings

What happens when I get a CCJ?

You should get a letter in the post. This letter is normally called a County Court Form. You will have to complete this within 2 weeks. We also suggest you get advice from a free debt advisor on how to proceed.

You will have to agree on a payment plan and then make sure you can make the payments as the plan outlines. You can even set up a standing order to ensure you don’t miss any payments. This means money will be automatically transferred from your bank to your lender.  For more information, take a look at our article on completing your CCJ forms.

How does a CCJ affect me renting or buying a property?

Both a CCJ and bankruptcy affect your credit rating, to varying degrees. If you are looking to rent a property, your letting agent will want to know about them. When completing any forms you should declare a CCJ and, note the date you were discharged from bankruptcy and if there is no space then attach a separate sheet noting the date.

But don’t worry once your CCJ is paid, lenders will pay less attention to it and in 6 years time, it will be completely gone.

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How can I remove a CCJ?

One way to remove a CCJ is by paying the full amount within a month. This will then remove the CCJ from your credit ratings and the public register. You can do this by going to court with your proof of payment.

If you take more than a month to pay the full amount then you will be marked as “Satisfied” on the public register (the same will show on your credit ratings). You will still need to go to court for this.

Please also take a look at our article on CCJ discharge

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