What to do if court action is taken

by CCCS on 23 April 2010  |  2 comments
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We give you the lowdown on what happens if court action is taken against you, and explain exactly what a CCJ is....

If your creditor is not willing to accept an offer of payment you may have made towards your debts, and collection processes have failed, they may start court action to recover their money.

To do this, the creditor must first send a default notice, giving you time to pay the arrears. The creditor can only start court action if you cannot pay.

If this happens, you receive a claim pack from the court. A genuine pack will be officially stamped by the court on the top-right side of the front page. The following documents will be included:

• An N1 claim form detailing how much you owe, who has applied to the courts, and where to send paperwork
• An acknowledgment of service form, which you can use to apply for more time to complete your paperwork
• An N9a admission form, which you can submit to show how much you can afford to pay
• A N9b defence form, to use if you think the amount being claimed is incorrect

It is important to complete and return paperwork before the given deadline. If you don’t, the court sets future payments at the amount requested by your creditor. The courts can only make a decision based on the information they have.

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The court will send a letter telling you how much to pay and when. This letter is an ‘N24 Judgment for Claimant’, commonly known as a county court judgment (CCJ).

CCJs explained

A CCJ specifies a monthly instalment you must pay, or asks you to repay the full debt immediately.

If you make payments as instructed, no further action should be taken. If you don’t, the creditor can ask the court to enforce payment using various methods:

• Warrant of execution - meaning a visit from the bailiffs
• Attachment of earnings - allowing creditors to take payments from your wages
• Charging order - unsecured debt is secured against your property
• Examination of means – a court hearing to examine evidence of your financial situation
• Third-party debt order - the court takes money directly from your bank account
• Enforcement of the debt through the high court - an 8% statutory interest rate is added, and private bailiffs are involved

A CCJ is recorded on your credit file for six years and one month from the date of judgment. The record will then be removed, even if the debt hasn’t been repaid. While on file, it is visible on credit-checks, and will make it difficult to get credit.

• Watch our video: The truth about bailiffs

If you are unsure if you may have a CCJ, ask your creditor, or request a copy of your credit file from one of the credit reference agencies, Experian, Equifax or Call Credit. There is a two pound charge. However, you can get a free 30 day trial with Experian with lovemoney.com. Alternatively, contact the Registry Trust which stores information about all judgments. There is an eight pound cost.

If you have received a CCJ asking for payments you can’t afford, you can ask for a more realistic payment to be set. Do this before further enforcement action starts, by getting an N245 from your local court or the HM Court Service website. It allows you to offer a payment based on your ability to pay. There is a court fee payable for this.

In some professions, your job may be at risk if you get a CCJ. To check, review your employment contract or speak to your trade union representative. If this applies to you, and a creditor issues a court claim, act quickly. Creditors may agree to alternatives.