Government Reform - County Court Judgements
Against a background of government reforms in Courts and Tribunals, the Ministry of Justice aims to ensure that the process of debt recovery strikes a balance, between the legitimate right of an individual or business to pursue a money claim, and the right of a debtor, to know of any claim against them and have the opportunity to defend that claim.
On 27 December 2017, the Government published a consultation paper following concern regarding the adverse impact of a County Court Judgment (‘CCJ’) on individuals who, unaware that a CCJ had been made against them, discover months or years later that their credit rating has been damaged. A significant number of consumers become aware of CCJs registered against them only when applying for a mortgage, loan or mobile phone contract and are subsequently rejected due to the CCJ’s effect on their credit rating. Too often, CCJs are genuinely unknown to individuals until it is legally impossible to defend the claim or have the judgement removed from the register even if the sum is paid.
Current Process - County Court Judgments
A CCJ is a Court Order to pay money owed to a judgement creditor. A CCJ may be made where a claim is issued and the defendant has not responded. At present, claimants are not required to ensure or prove that a claim is received by the defendant. Individuals are currently responsible for updating the rest of the world with their new address and having mail redirected.
From Claim to Judgment
Following issue of a claim form to the defendant, the defendant has 14 days to reply (or 28 days if an acknowledgment of service is returned requesting further time to file a defence). If the defendant has not responded or filed a defence within 14 or 28 days, a claimant can obtain a Default Judgment.
Once made, a CCJ is entered on the Register of Fines, Orders and Judgments and remains on record for 6 years. The register may be examined by third parties, such as a lender from whom a defendant is seeking credit. If a CCJ is paid within 30 days, the CCJ is removed from the register. If paid after 30 days, the CCJ will be marked as ‘satisfied’ on the register, however, the Judgement remains on the register for a 6 year period.
One of the current Government proposals include the striking off of a CCJ from the register immediately once unknown debts are resolved and a Judge is satisfied that the defendant was previously unaware of the claim and judgment.
Setting aside a CCJ
Once the existence of a CCJ becomes known to a defendant, they have a right to apply to the court to have the claim set aside. However, strict rules apply as to whether courts may or must set aside a default judgment depending on the circumstances. The Court may set aside a Default Judgement if:
- The defendant has a real prospect of successfully defending the claim; or
- It appears to the Court that there is some other good reason why the CCJ should be set aside, varied or defended.
The Court must set aside a Default Judgement if the judgement was wrongly entered into because:
- The defendant has paid the whole amount owed before the date judgement was entered
- The defendant has filed an acknowledgment of service and/or defence within the time limits.
Government Consultation – need for reform
In the financial year 2016/2017, approximately 1.4 million County Court money claims were issued. Subsequently, 1.1 million CCJs were issued, 85% of which resulted in Default Judgements.
The Government has set out proposals for informing consumers of their rights and responsibilities; including how consumers should keep creditors up to date with their contact details. There is growing concern that creditors are deliberately using addresses for debtors which they know to be old. This not only deprives debtors of the opportunity to defend the claim but also has severe consequences in relation to possible enforcement of the debt; in addition to the stated adverse effects of CCJs on potential borrowing, which may be detrimental to the livelihoods of many individuals. Justice Minister Dominic Raab stated that the Government intends to ‘protect vulnerable consumers from abuse by rogue companies that can destroy the credit rating of innocent people without them even knowing about it…’
There is a focus on parking companies and unscrupulous debt agencies in relation to abuse of the CCJ system. The Department for Communities and Local Government is considering concerns related to CCJs following parking charges. There is a move towards delivering a standardised practice across all parking companies; aiming to eradicate unfair charges and reduce the instances of claims where consumers may be unaware of parking charges being applied.
How to respond if you receive a CCJ incorrectly
Brian Kirby, Head of Debt Recovery, comments, “To protect yourself from the consequences of having a CCJ registered against you without your knowledge it is important to ensure creditors are notified of any changes to your address. To circumvent the harsh effects of the present rules, it is advisable to ensure that for example DVLA always has an up to date address.”
If you have become aware of a CCJ registered against you, which you wish to dispute, or you have received a debt claim, you can contact Brian on 02380 717421 or email email@example.com to discuss your options.
This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.