IVA and CCJs: Can an IVA Deal with a CCJ?

Can a CCJ be included in an IVA?

Yes. A CCJ is a court order confirming that you owe an unsecured debtUnsecured debtAn unsecured debt is borrowing that is not tied to an asset, so the lender cannot automatically take your home or car if you do not repay.Read more →, and the debt behind it can normally be included in the IVA like any other unsecured debt. Once the arrangement is approved, the creditor with the judgment is bound by it, even if they voted against or did not respond. GOV.UK says an IVA binds all creditors once creditors holding 75% of your debts agree, and it stops creditors from taking action against you over the debts it covers.

The judgment itself does not disappear, because it is a court record. But the creditor generally cannot enforce it against you while the IVA is in place and you are keeping to the terms.

What happens to enforcement

Once the IVA is approved, enforcement action on included debts should stop. This usually covers:

• Bailiffs (enforcement agents): A warrant of control for the debt should not be used while the IVA is in force.
• Attachment of earnings: Deductions from your wages for the judgment should stop.
• Charging orders: A creditor may already have a charge on your home. An IVA does not simply remove an existing charge, because it is a form of security. Ask your adviser how it applies.

Charging orders and your home

A charging order lets a creditor secure the judgment debt against your property. If you are a homeowner with a CCJ, check whether a charge has been registered. Because a charge is a security, it may be treated differently from the rest of your unsecured debts, which can affect how the IVA deals with your equity. Our guide to IVAs for homeowners explains equity and the end-of-term review.

What happens to the CCJ on your credit file

A CCJ is recorded on your credit file for six years. The IVA is also recorded for six years from when it starts. A CCJ paid in full within a month of the judgment can be removed from the register, but that route is rarely open once you are in financial difficulty. In an IVA, the judgment stays on your file and shows as satisfied or part of an arrangement, depending on how the creditor reports it. See our CCJ guide for the rules on setting aside and paying a judgment.

Weighing up the options if you have a CCJ

A CCJ is one reason people look for a legal solution. The main options are:

1. An IVA: Legally binding, stops enforcement and handles all your unsecured debts together. It costs fees and lasts years.
2. A debt management plan: Informal, so the judgment creditor is not bound, and may continue enforcement. See debt management plans.
3. A Debt Relief Order: Possible for low debts and income, and it covers CCJs. Check the current limits.
4. Bankruptcy: Stops enforcement and ends most debts, but with serious consequences.

What to do if you have a CCJ now

Do not ignore the judgment. Check whether you can ask the court to vary the payment order if it is unaffordable, and speak to a free adviser at StepChange, National Debtline or Citizens Advice before choosing an IVA. If you were not aware of the claim, you may be able to apply to set the judgment aside. Gather your court papers, a list of all your debts and a budget, and ask for advice about which option fits.

A worked example

Imagine you owe £6,000 on a credit card, £4,000 on a loan and £3,000 to a catalogue company, and the catalogue company has obtained a CCJ and sent bailiffs. A practitioner might propose an IVA covering all three debts. If creditors holding 75% of the debt agree, the catalogue company is bound too. Its warrant for bailiffs should not be used on the included debt, and the other creditors stop adding interest. The CCJ stays on your credit file, but you now have one monthly payment instead of three separate demands and the threat of enforcement has gone. The cost is the practitioner's fees and the years you spend in the arrangement.

Mistakes to avoid

Do not ignore a claim form or judgment. Missing the deadline to respond is how many CCJs arise in the first place. Do not agree to a payment order that you cannot afford, because failing to keep it up can lead to enforcement. And do not assume a CCJ must be paid before you can get help: advice is available at any stage, and in some cases a judgment can be set aside or varied.