If you received a County Court Judgement (CCJ) you will be told to pay either the full amount of the debt immediately or make monthly payments towards it. However if you cannot afford to pay the CCJ as instructed you cannot just ignore the debt.
If you make no attempt to repay what you owe this will increase the likelihood that your creditor will then take further more serious action against you such as applying to the Court for an attachment of earnings so money is taken directly from your wages or a charging order against your property if you are a home owner.
For this reason you need to take action to either reduce the payments you have been asked to make to an amount which you can afford or consider starting a debt management solution which can include CCJs.
Apply for an Instalment Order to reduce your CCJ payments
If you cannot afford to pay the debt that you owe based on the amount instructed in your CCJ you can apply to the Court for the amount to be reduced to a more reasonable instalments. This is called applying for an Instalment Order.
If you make an application to the Court for an Instalment Order they will review your financial situation and decide on a monthly payment amount which you should be more able to afford. The Court can order that you make token payments of just £1 a month if this is all you have.
However even if you successfully get an Instalment Order the issue is that you ultimately still owe the money which you have been ordered to pay in your CCJ. The Court only has the power to dictate how much you have to pay each month. They cannot actually write off any of the debt for you.
As such after the Court has reduced the payments you have to make repaying the CCJ debt in full can still take a very long time. Where this is the case a better option may be to use a debt management solution. This is especially the case if you also have other debts that you are struggling with.
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Use an Individual Voluntary Arrangement to overturn your CCJ
If you are struggling with more debts than just the CCJ you have received a good way to solve your debt problem once and for all is to use a debt management solution. The first option that you may hear or read about is a Debt Management Plan (DMP).
However a DMP is not a particularly useful debt solution if you have a CCJ . This is because the DMP is informal and you cannot automatically include a CCJ debt in this type of plan. To do so you would first have to apply to the Court for an instalment order so that the payments you make fit within the plan. In addition you are still left facing the prospect of repaying everything you owe.
For this reason a better solution to consider if you are struggling with a CCJ is an Individual Voluntary Arrangement (IVA). One of the advantages of the IVA is that once in place it will overturn any CCJ that has been issued against you so you can stop paying it. The arrangement will also give legal protection to both you and your property preventing any of your creditors from applying for an attachment of earnings or a charging order.
Is going bankrupt an option to deal with my CCJ?
If you are looking for the right debt management solution to deal with your CCJ then you should not rule out the option of bankruptcy. Any CCJ that you have will be included if you go bankrupt. The payments you have been order to make are stopped and the CCJ is overturned.
Bankruptcy does have a bad reputation but in reality it is largely misunderstood. If you are not a home owner then the affects of bankruptcy will normally be exactly the same as if you start an IVA. If you are a home owner you may be worried that your property will be at risk of being sold. However this is not automatically the case unless there is considerable equity in it.
Once of the major advantages of bankruptcy is that you only have to make payments towards your debt if you can afford to do so. This means that it can be a very useful solution if you have very little spare income to make payments towards a CCJ.
Certainly if the court has suggested you only need to pay a nominal monthly payment of £1 or £5 towards your CCJ then this suggests you have very little money available to repay debt and bankruptcy might be a very sensible solution to consider.
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