Interest On A CCJ
The rules relating to interest on a CCJ are different depending upon whether the Judgment is made in the High Court or County Court. The vast majority of CCJs are entered due to claims not being defended and will therefore very likely be in the County Court. All money claims must be started in the County Court Money Claims Centre, which is part of the County Court.
The general rule is that interest on a CCJ or order will accrue at the rate of 8% per annum, provided that the Judgment is for a sum not less than £5,000 or it does not fall under the Late Payment of Commercial Debts (Interest) Act 1998.
There are some exceptions to the rule but in short, it should be expected that a Judgment which exceeds £5,000 will also attract interest at the annual rate of 8%. Judgments that do not exceed £5,000 generally do not attract continuing interest.
If a Judgment exceeds £5,000 and you intend to pay it off over time, it may be cheaper to borrow the money at a lower rate to pay it off, rather than the court rate of 8%. The difficulty is however, that once a CCJ is entered, lenders might impose a rate greater than 8% or not be prepared to lend at all. It is a catch 22 situation and can be difficult to get out of.
How Long Does Interest on a CCJ Accrue For?
Interest on a CCJ can add up, especially at the rate of 8%. As a general rule, interest starts to accrue from the date that the Judgment is entered.
Interest will continue to run until the debt is satisfied in full. These provisions are set out in articles 1 and 2 of the County Court (Interest On Judgment Debts) Order 1991.
Interest Can Be Suspended In Certain Circumstances
Interest on a CCJ is suspended during certain enforcement proceedings for example if an attachment of earnings order is in force and sometimes if an instalment order is made.