A record number of CCJs – or County Court Judgments – were issued in 2019, according to the Money Expert. The total of 1.17 million CCJs issued represented £1.7 billion of debt, an 8% increase in the comparable figures for the year before.
With so many individuals likely to be the subject of such judgments, therefore, it might be helpful to examine just what they are and address whether it is possible to get a mortgage with a satisfied CCJ.
What is a CCJ?
If someone – an individual or a company – believes that you owe them money and you have not responded to their requests for payment, they may apply to the county court requesting an order that you pay the amount owed.
The process is relatively straight forward, as is the communication of any order made by the County Court. As the official website explains, the CCJ is simply sent to you by post, at your last known address, stating:
- the amount you owe;
- how to make payment – by instalments or in full;
- the deadline for making the payment or payments; and
- who you must pay.
If you respond to the CCJ by paying the amount ordered within 30 days, your debt is said to be “satisfied”, and the record of the CCJ having been made is deleted completely. If you make payment after the 30-day deadline, however, although you will still have satisfied the CCJ, the judgment remains a matter of public record.
For as long as the CCJ remains unpaid, explains the credit reference agency Experian, the order remains “unsatisfied”.
The record of your CCJ remains public for six years, after which it is deleted from the public record.
The nature of CCJs
The majority – 33% – of CCJs are for relatively small amounts, of between £100 and £500, explains the Registry Trust.
This may also reflect the fact that many CCJs are taken out against younger people. 160,000 of youngsters in their 20s had CCJs recorded against them during the course of 2019, often, for example, for relatively low-value transactions such as subscriptions or mobile ‘phone contracts.
To make matters worse, many of those youngsters are likely to be moving around from one residential address to another. They may, therefore, be completely unaware that a CCJ has been posted through the letterbox of a recent residence.
In those cases, although it is then possible to request the court to “set aside” the judgment, in practice, few people do so – since they remain unaware that the CCJ has been issued.
Can I get a mortgage with a satisfied CCJ?
The increase in the volume of CCJs issued is a worrying trend across all age groups, of course, but might be a special concern for younger people because of the adverse effect such an order has on your credit rating and, therefore, on your ability to secure a mortgage – or any other credit for that matter.
The very fact of a CCJ may indicate to most potential lenders that you have defaulted on previous responsibilities for paying your debts. Past defaults are typically read as a likelihood of your repeating the failure in future, so, further credit may be denied.
There are mortgage lenders, however, who take a more understanding approach and are prepared to consider your application for a mortgage even though you previously had a CCJ.
Naturally, any potential lender will also consider how you responded to the CCJ:
- if you responded by settling the debt within 30 days of the issue of a CCJ, you have already satisfied the court order it and the fact of its issue is no longer a matter of public record;
- even if you delayed settlement beyond the initial 30-day period, you satisfied the order once you paid the debt; but
- if the CCJ remains unpaid for as long as six years’ after its issue, the order is still unsatisfied.
Provided the order has been satisfied, a potential mortgage lender is more likely to consider your application favourably – even if it is still a matter of public record – rather than a CCJ which remains unsatisfied.
Since the record of a CCJ will have affected your credit rating, you may, in any event, need to pay a higher rate of interest for your mortgage or accept more rigorous terms. The bigger the deposit you have, the better.
To ensure that you get the most appropriate mortgage with a CCJ, you may wish to use the services of a specialist broker. He or she will be able to identify the lenders who will consider your application and who offer what they consider are favourable rates and terms (based on your own unique financial situation).