If you have a CCJ, it will be cancelled and the debt written off if you go bankrupt. However the record will remain on your credit file.
Included in this article:
- What happens to a CCJ if you go bankrupt?
- Can the CCJ record be removed from your credit file?
- Can the creditor still take action against you?
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What happens to a CCJ if you go bankrupt?
One or more of your creditors may have issued a CCJ (Country Court Judgment) against you. If so, you don’t need to worry. These debts are still written off if you go bankrupt.
Although the CCJ is a Court order to pay the debt owed, the fact you have gone bankrupt overturns this. The order is no longer valid. The debt will be dealt with by the official receiver in the same way as any other that you owe.
Once you are bankrupt, you should stop making any payments towards the CCJ direct to the creditor or any collector acting on their behalf.
The Official Receiver will write to the creditor and inform them of the situation. If you are contacted in the mean time, you simply need to explain that you are now bankrupt. You can also give them your reference number. They will be able to check this on the Insolvency Register.
Can the CCJ record be removed from your credit file?
When a CCJ is issued against you, it is recorded on your credit file. This has a significant negative impact on your credit score.
The record will remain on your file for 6 years regardless of whether you actually pay off the debt any sooner. The fact you have gone bankrupt and the debt has been written off makes no difference. The record of the Judgment will only be removed from your file 6 years after it was added.
That said, this situation doesn’t usually matter. Remember, the fact you are bankrupt also negatively affects your credit score for 6 years.
In almost all cases, the start date of your bankruptcy will be after the date your CCJ was issued. Given this, by the time the record of bankruptcy is removed, the record of the Judgment will also have disappeared. Your credit file will then be clear.
It is rare but possible for a CCJ to be issued against you after the date you go bankrupt. If this happens the record will remain on your credit file after the record of your bankruptcy has been removed.
Can the creditor still take action against you?
After a CCJ is issued against you, the associated creditor still has the option to take further action against you. They can apply to the Court for an attachment of earnings or, if you are a home owner, a charge against your property.
Not all banks will take this kind of action. However it is common for business loan companies and debt purchasing companies to do so.
Once you are bankrupt, you are protected. All of the creditors included in the process are now barred from taking further enforcement action against you. The options are no longer available. If an application was made, it would be rejected by the Court.
One or more of your creditors may have already instructed a bailiff to visit your home. Even they have to stop from the day you go bankrupt.
It is very important to understand that once a Charge is issued against your home, the debt becomes secured. If you subsequently go bankrupt, it can’t be included and will not be written off. For this reason, if you believe one of your creditors is planning to apply for a charge, you should call us immediately for more advice.
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