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County Court Judgments: How to challenge a CCJ
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How can company directors dispute a County Court Judgment (CCJ)?
A company director can dispute a County Court Judgment or seek to remove it if any of the following conditions apply:
- You wish to lodge your own claim against the creditor
- You believe that the creditor is responsible for the ongoing dispute
- You’ve already paid the debt in full or in part
- The details on the claim letter are incorrect
- The goods are defective, or the service level is unacceptable
To challenge or remove a CCJ, a defence form must be submitted.
If a creditor seeks a County Court Judgment (CCJ) against your business, under certain circumstances you may be able to challenge or remove it. As long as the debt is in the name of the limited company, you should also be protected from court action against you personally.
If you’re a sole trader it’s important to be aware of the ‘pre-action protocol.’ This requires creditors, with the possible exception of HMRC, to do all they can to recover debt in other ways before taking court action.
So before we identify how you might be able to remove or challenge a CCJ in relation to a business debt, let’s look a little more at the background to this form of creditor action.
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Having unsuccessfully attempted to collect their debt using the standard channels, your creditor may seek assistance from the court. An application is made for a judgment that orders you to pay, but CCJs carry further risks that you may not be aware of, potentially including:
- Being a precursor to a winding up petition against your business
- Damaging your business credit rating, and potentially your personal credit rating
- Creating difficulty in obtaining business borrowing in the future
So is it possible to challenge a CCJ, and in what circumstances?
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Once you’ve received a letter of claim from your creditor, the claim can be disputed via the enclosed defence form. If you believe you don’t owe any of the money, or only some of it, this can be indicated on the form.
Acting quickly in defending yourself, and clearly explaining why you’re making a challenge, is crucial. The ‘particulars of claim’ section details the debt owed, and you should address each of the points you want to dispute.
Potential reasons for challenging a CCJ include:
- Making your own claim against the creditor
- Believing your creditor is responsible for the ongoing dispute
- The fact that you’ve already paid the debt in full or in part, and the details on the letter of claim are incorrect
- Some of the goods are defective, or the service levels unacceptable
Essentially, the reason for challenging a CCJ must be based in law and supported by documentary evidence. You face hefty court costs if the challenge is unsuccessful, so it’s crucial to obtain professional advice before proceeding.
If a judgment has been made against you, it may be a ‘default judgment.’ This can occur if you fail to answer the letter of claim or return the papers too late, but if you believe the judgment is unjustified and you can back this up, it may be possible to have the CCJ removed.
Removing or ‘setting aside’ a CCJ involves submitting application notice N244, which is available online, along with a court fee. Essentially you’re requesting the court to set aside the judgment for a particular reason or reasons, and a hearing may be arranged at which you can put your case.
Common reasons for removing a CCJ include:
- Being unaware of the creditor’s court action against you – maybe you moved house and the creditor took no action to find your new address, for example, but there are limitations when relying on this reason
- An error has been made in the County Court Judgment
- The claim procedure wasn’t correctly followed
- You were unable to defend the claim, perhaps due to illness
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There are certain circumstances in which the court must remove a default CCJ, including when:
- You’ve paid the debt in full, including interest and relevant fees/costs before the judgment was made
- You returned your defence form or asked for more time to pay within the stated deadline
The court may also agree to set aside the judgment if they believe you have clear grounds, or there are other circumstances that need to be taken into account.
If your business has received a letter of claim in connection with an outstanding debt, you need to seek professional guidance quickly. Real Business Rescue has extensive experience of challenging and removing CCJs, and can advise on whether it’s the right course of action for you. We offer free same-day consultations, and are based from a network of 100 UK offices.
Further Reading on Is it possible to remove or challenge a CCJ?
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