8th November 2021
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.
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:
So is it possible to challenge a CCJ, and in what circumstances?
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:
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:
There are certain circumstances in which the court must remove a default CCJ, including when:
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.