Cannot Afford to Pay a CCJ – Options to Avoid Enforcement
If You Cannot Afford to Pay a CCJ and Need Time to Pay It
If you cannot afford to pay a CCJ you face a serious problem and likely one you will face for quite some time.
Once a claimant has a CCJ it can enforce it in a number of ways including bailiff, sheriff, attachment of earnings or even bankruptcy. These can be very unpleasant.
The court has a discretion to impose an instalment order for the debt to be paid off. This falls on the discretion of the particular Judge considering the circumstances of both you and who you owe the money to. The main principle is the court will apply is that there needs to be good reason to deprive someone of their right to enforce a CCJ.
You can however, apply for an instalment order by sending an application to court using form N245 which you can find here on the Justice website. There is a court fee to pay for the court to process the application. You will see from the form that a great deal of personal financial information needs to be provided to enable a Judge to decide whether to impose an order.
Once the application is issued, the creditor will first be sent the proposal for instalments and have the opportunity to agree or reject the offer. If accepted, the court will record the instalments in an order. If rejected, the court will likely list a hearing to take place before a Judge to decide whether to impose instalments or decide it on the papers alone.
It is important to understand that filing the application does not automatically stop enforcement measures in place. To get an order from the court to stop enforcement, an application needs to be made to court seeking a stay of enforcement or to suspend a warrant.
You Are An Individual And Unlikely To Ever Be Able To Afford To Pay It
If your assets or income mean you cannot afford to pay a CCJ, the enforcement efforts of who you owe the money to may be fruitless.
If your debts are problematic, you ought to consider speaking to an insolvency practitioner to consider possible options to help relieve the pressure or extinguish your debts.
When people think of insolvency they immediately think about bankruptcy. That is sometimes an option (which has been made straightforward by way of an online portal rather than having to apply to court) but there are other solutions available including the following:
Individual Voluntary Arrangement
An individual voluntary arrangement (IVA) is an agreement by the insolvent person with his creditors. The purpose of an IVA is to prevent all the creditors from taking any action against the individual to recover the monies owed but also seeking to ensure that they get paid something rather than nothing. For an IVA to come into place, the necessary majority of creditors need to vote in favour of it and to get the creditors onboard it really needs to be shown that the outcome of the IVA will be better than if the individual went bankrupt.
Debt Relief Order
This is a relatively new procedure which prevents creditors from taking steps against an individual and effectively write off the debts. However, this is only available to people with very low income and assets.
A Debt Repayment Plan
This is not a formal insolvency procedure but is simply an agreement with creditors to pay so much to reduce the sum outstanding either to agree a reduced total amount or to give time to pay the balance in full.
An Administration Order
This is where the creditors do not enforce the debt for five years during which period the insolvent individual makes scheduled repayments, at the end of the five years being released from any further liabilities. It is similar to an IVA.
Enforcement Restriction Order
Not many people know about the option of applying to the County Court for an enforcement restriction order which suspends creditors from taking enforcement action against the insolvent person.
Finally we return to the option of bankruptcy if you cannot afford to pay a CCJ. You yourself can petition for your own bankruptcy.
A creditor can also apply for the debtor’s bankruptcy if the amount owed exceeds the sum of the £5,000. It used to be only £750 but on 1st October 2015 the threshold was increased. The threshold to petition against a company remains at £750.
When a person is made bankrupt, a trustee in bankruptcy is appointed who may be a government employee of the Insolvency Service. The assets of the individual become that of the trustee to deal with to try to get money in to pay the creditors. Bankruptcy also creates restrictions on what an individual can do in relation to financial affairs.
Generally a bankruptcy now only lasts for a single year, although this period can be extended in particular if the bankrupt individual does not co-operate with the trustee in bankruptcy or if there has been some wrongdoing on his part. The normal position however, is that a bankruptcy ends automatically after a year.
If you are looking for advice from an insolvency practitioner, we recommend you visit the Insolvency Practitioners Association website here.
Conclusion – What To Do If You Cannot Afford To Pay A CCJ
If it might be possible to pay off the CCJ by instalments, an application can be made to court to seek an instalment order.
Both individuals and companies have insolvency procedures available to him to take off pressure and potentially extinguish debts owed to creditors. The earlier advice from an insolvency practitioner is sought, the more options might be available and the better the outcome that might be achieved.
Understand your options, make a decision and take action. Putting the matter off will not help.