Introduction to Avoiding CCJs
A CCJ is often the final step of debt recovery. For this reason, it is important to recognise that avoiding a CCJ is better than dealing with the issue once it has progressed that far. As soon as a CCJ is entered with the court, it will remain on the register of judgments for six years AFTER the debt has been satisfied.
Before the Claim is Issued
Once a claim form or summons has been issued, it is very difficult to avoid a CCJ being entered on the register. The best option is to prevent the claim being issued, in the first place.
Remember, making a claim is an expensive process for the person to whom a debt is owed. Therefore, they too will be keen to avoid the process if at all possible. If you find yourself in a position whereby debts are not being paid and you are in danger of having a CCJ entered against you, it is time to reassess your entire financial position.
Write down a list of all of your outgoings and income and consider how much, realistically, you can put towards paying off your debts. By approaching anyone to whom you owe money and making arrangements independently of any court proceedings, you are putting yourself in a much stronger position in terms of credit rating.
Longer Term Planning Against CCJs
If a CCJ becomes inevitable, the approach needed is a little different. In practice, people who have an otherwise unblemished credit rating may find that one CCJ has very little impact on their ability to obtain a high street mortgage.
On the other hand, anyone who regularly has CCJs against them will find themselves in a difficult long-term situation. It is vital to remember that if a mortgage is defaulted on, the property will be repossessed. Not only do you lose your property, but also the lender takes charge of the sale, which often results in less than market price being achieved. Further, repossession will result in your credit rating suffering, in the future; therefore, this predicament should be avoided, if at all possible. If you are facing the possibility of repossession you can speak to specialist mortgage brokers who may be able to assist with a ‘repossession remortgage’.
Anyone who is struggling to manage debts should think carefully before entering into a mortgage agreement, as this could add to credit difficulties and cause even larger rating issues, in the future. Sometimes, those with CCJs would be better off resolving their imminent issues, before starting on the mortgage trail.
A CCJ should be avoided using individual agreements, if at all possible;
as a CCJ is likely to have a negative effect on mortgage ratings, clearing any outstanding CCJs is a good idea for any prospective borrower;
consider carefully the income and outgoings that you have regularly as, once a mortgage is entered into, this will be an added monthly burden that could actually make matters worse, if the means to make payments are simply not available.