How to Avoid a CCJ

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.

Specialist CCJ Mortgage Brokers

Unfortunately, if you have a CCJ, finding a suitable mortgage provider can prove extremely difficult. In many cases, banks will simply not consider someone with a CCJ regardless of the circumstances surrounding the judgment. This can mean that a borrower does not have the full opportunity to shop around and achieve a favourable interest rate.

High Street Lenders And CCJs

The vast majority of high street lenders will not consider someone for a mortgage who has a CCJ on their record therefore, in order to obtain a mortgage from these sources you will often have to wait six years, until the CCJ has cleared from your record.

When you think the CCJ is no longer on your record, request a credit report from an agency such as Experian (who currently charge £2) to make sure that the record has been updated, before you make your application.

In the meantime, it pays to build your credit rating in other ways, while you are waiting for your record to be cleared. For example, it may be possible to start saving for a deposit towards your property which will allow you a better rate, or to clear other debts such as credit cards which again will improve your rating. As soon as you realise that you have a CCJ that will affect your mortgage prospects, you should obtain a credit report so that you can also tackle any other possible rating weaknesses.

If the CCJ is the only negative issue on your record, then it may be worth presenting your case to your current high street bank, as they may be able to make a better judgment on your situation.

Specialist CCJ Mortgage Providers

Specialist providers offer mortgages to those who would not otherwise be able to obtain mortgages through a high street bank. By approaching a Specialist provider you are more likely to obtain the financing you need, even with a very poor credit rating. However, these companies almost invariably offer poorer interest rates compared with high street banks and many have particularly onerous terms such as extended tie-in periods.

If you are considering this route, an independent broker should prove invaluable as they can ensure that you secure the best possible deal for your position.