What Happens If You Don’t Pay a CCJ After Six Years?

February 27, 2024 / FAQs

County Court Judgments can be a serious issue for companies dealing with financial issues. They act as an ultimatum from creditors, demanding repayment from a company. This can cause a significant strain on a company’s cash flow, and marks an increase in creditor pressure. If the County Court Judgment is not repaid, this can lead to further problems, and may result in creditors escalating the issue. If your company has a CCJ, and you intend to make a full repayment, you will have a maximum of six years in which to do so. But what happens if you fail to make repayments within this time frame?

In this article, Clarke Bell will answer this question, detailing the wider effects of County Court Judgments, how they impact limited companies, and what you can do about them.

What is a County Court Judgment?

A County Court Judgment (CCJ) is an order given to a company by a court on behalf of a creditor. It is a formal demand for the repayment of a debt or the negotiation of an agreement with creditors. If neither of these goals are met, then the issuance of a CCJ can be used as justification to escalate the issue. Escalation can include more forceful debt collection methods, such as bailiffs, or the use of a winding-up petition to trigger compulsory liquidation.

Once a company’s creditors have had their CCJ application approved, the order will be delivered to the company’s headquarters. This communication will have all the necessary details, ranging from amounts payable to payment deadlines. If your creditors have applied for a CCJ, you should have been contacted prior to the order, so it is a good idea to keep a close eye on your company’s communications. Once the CCJ has been delivered, it will take effect, and the time frame will begin.

How long does a CCJ last?

In essence, a CCJ has two time-frames: the first 30 days after the order has been issued, and a subsequent six-year period. If you make a full repayment during the first thirty days of the order, it will not be added to your company’s records. This means that future creditors, business partners, suppliers, and members of the general public cannot view any evidence of the CCJ on databases storing company records. As such, your company will be spared many of the negative effects caused by a CCJ.

If you cannot repay the full loan value within thirty days, and instead must make monthly repayments or reach a long-term agreement with creditors, then the CCJ will be registered against your company. This adds the order to your records, which are publicly available on a variety of online databases for anyone to access. Should future creditors or other potential partners see evidence of a CCJ, this may impact how they want to work with your company.

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What are the effects of a CCJ on a limited company?

A CCJ can have a variety of effects on a company, many of them being quite negative. However, the extent to which a company will be impacted depends on how fast the company makes its repayments. Doing so within the thirty-day period will shelter a company from many of the negative effects. However, the company will still have a sharp and immediate strain placed on its cash flow, which it could struggle to bear. This is especially true for companies already facing financial difficulty, which is often the case for those issued a CCJ.

If repayment cannot be made within thirty days, a company will have additional negative effects. Most notably, the CCJ will be registered against the company, evidence of which can be viewed on publicly available databases. This can result in a negative public perception of both the company and its directors, the refusal of future creditors or suppliers to work with the company, and the aforementioned financial consequences. Furthermore, existing creditors are likely to see the CCJ posted, and may be inspired to submit a CCJ of their own. This can cause a cascading effect, and potentially result in the decline of the company.

Read Our Complete Directors Guide To CCJ’s

What happens if I don’t repay within six years?

If you haven’t repaid a CCJ within six years, it is likely that your creditor will proceed to issue a statutory demand and then a winding up petition or send in bailiffs, depending on the amount of the debt that is still owed and the attitude of the creditor. These are scenarios that you will want to avoid, as they can take up a lot of your time and effort.

What if I can’t repay my CCJ?

If you can’t repay your CCJ, it may not be a good idea to allow the repayment term to expire. While it certainly is possible for your company’s creditors to forget about the debt, or deem it too costly to collect, it isn’t the safest bet to take. In such situations, it may be preferable to consider insolvency procedures.

Creditors’ Voluntary Liquidation

If your company cannot repay its CCJ debt, it is likely to be classified as insolvent. Creditors’ Voluntary Liquidation (CVL) is a procedure for insolvent companies to close down and ensure the directors’ legal obligations are upheld. The procedure is voluntary, allowing directors to appoint an insolvency practitioner of their choosing to the role of liquidator.

While in this role, the liquidator will essentially take control over the company from directors, and will be responsible for executive decisions going forward. This includes the identification of company assets, their disposal, and the distribution of the proceeds amongst creditors. Once all possible distributions have been made, the company will be closed down and removed from the Companies House register. At this stage, any outstanding debts will be written off, barring those secured by personal guarantees. For a more detailed breakdown of CVLs, read our complete guide to the process.

Let Clarke Bell help

Receiving a CCJ is never a pleasant event, even if your company can make repayments. It’s stressful, puts an immediate strain on cash flow, and takes attention away from managing the company. However, if you can’t make repayments, it isn’t a good idea to let time escape you. Failing to repay within the allotted time frame is a very risky move, one that could lead to more trouble down the line.

Clarke Bell can help you find solutions to this situation.

We have more than 29 years of experience in helping struggling companies find the best path forward, and we can do the same for you.

Don’t hesitate to contact us today for a free, no-obligation consultation and find out exactly what we can do for you.