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Dealing with Judgment Debt

Published on:May 21, 2019Author:alex

Article by Laura Walshe of The Business Debt Advisor

A County Court Judgment (CCJ) is essentially a County Court Order which enforces the payment of an unpaid debt.

A CCJ against a limited company is likely to be the culmination of several attempts by a creditor to recover unpaid debt.

If that creditor has taken reasonable steps to recover what they are owed, they can apply for a CCJ and if the Court is satisfied that the debt can be proven, it is likely that a CCJ will be issued.

If your company has received a CCJ there may be various implications. It will impact on credit rating and as a result you may find that the company’s borrowing capacity is also affected.

However, Directors can be assured that it will not impact on their own personal credit file, unless of course the unpaid debt was personally guaranteed.

What will happen when a creditor takes action?

Generally, a County Court Summons will be issued by the creditor in an attempt to obtain payment of the outstanding balance. The balance payable will now include the court fee and interest, so the company will be required to pay more than was originally due.

The company will then have 14 days’ to respond, although it can request an extension of a further 14 days. If no payment is made, or if attempts at negotiation are unsuccessful, the court is likely to agree that the debt is valid and issue the CCJ.

Once a CCJ is issued the company will have 30 days in which to pay the debt in full. Failure to pay in this timescale will result in the registration of the CCJ and this information is then available to credit reference agencies.

A worst-case scenario is that the judgment could then lead to further action in the form of a winding up petition.

Options as a Director when your company is facing a CCJ

It is important to act quickly. By taking swift action it is possible to mitigate the potential damage of a CCJ being registered.

The involvement of a licensed Insolvency Practitioner could be the key to a successful outcome. At The Business Debt Advisor we offer practical advice with your preferred outcomes in mind.

It may be possible to negotiate informal settlement of the debt. Or, if there is no agreement, we can advise directors on which insolvency process is appropriate.

Improving your Company’s Credit Rating

Business credit scores range from 0 to 100. A rating of 75 or above is considered an excellent rating but many businesses fall outside of that range.

Credit reference agencies will use various sources of information to generate a rating which banks and other finance providers can use to determine whether or not they will extend credit, and the terms upon which any credit is offered.

If your company has a poor credit rating there are steps you can take to improve it, for example:

  • Always pay on time – This is a vital part of the calculation of your credit rating and will help to improve the company’s credit score considerably.
  • Make sure that the information is up to date – Inaccuracies or a lack of information on the company’s profile can be as negative as a poor history.
  • Keep your registrations up to date – Agencies gather information from various sources to confirm a business is genuine, so ensure that it is up to date with Companies House, and any other directories in which it is listed.

Despite your best intentions a company credit rating will undoubtedly be affected if trading is tough.

If your business is facing action from its creditors, or has received a CCJ please fill out our Contact Formand we will be in touch.

Alternatively, call our FREE ADVICE LINE on 0800 781 0990.

Our team has extensive experience in dealing with businesses across all sectors and can arrange an initial consultation at no cost, usually on the same day.