What is the Difference Between a CCJ, a Default, and Bankruptcy?

Dealing with debt is supposed to be a simple and straightforward matter. However, this becomes complicated if the law is already involved. Things like a County Court Judgement, a Default, and Bankruptcy have their own implications and consequences.

As such, you would need to know what makes these three different from each other. This way, you would know how to deal with them. Better yet, you would avoid getting yourself in these situations.

What’s a Default?

Defaults commonly occurs when you miss several payments on a single debt. A default simply means that the lender has lost his faith in your ability to conventionally pay for your debts and have ended their initial agreement with you.

Since they no longer believe that you can meet your obligations the normal way, the lender is now free to resort to other actions to really compel you to pay up.

It’s important that each lender has their own threshold before they declare your debt defaulted. For some, that could take in between 5 to 10 missed payments.

For others, it could be a period of non-communication between a year to half a decade. There is also the fact that some loans tend to have more rigid requirements for payment than others, necessitating defaults when certain conditions are met.

What Happens, Then?

More often than not, you will be notified of your default through a letter which will include details such as:

  • The agreement you made with the lender
  • The terms of that agreement you allegedly broke
  • The amount you owe and when you should pay for it
  • The actions that the lender will take if you fail to comply
  • A request for a response which should be given out in no less than a week

If you do find a way to pay your dues within the time period, then no further action will be taken against you. The lender is also entitled to initiate some actions if you do insist on not paying. This will include:

  • Demanding the full payment
  • Passing the debt into a collection agency who shall then commence in compelling you to comply with your obligations
  • Filing a court action against you for the collection of the sum
  • Initiating repossession proceedings of any property you have put up as a collateral as part of the agreement.

What’s a CCJ?

The County Court Judgement is not a single event. It is actually a series of legal process that ends with you being obligated to pay your debt.

Here, you will be sent another notice informing you that you owe someone a considerable amount. By virtue of the debt, you are compelled to attend to your obligations.

If you do acknowledge your debt, a re-negotiation with the lender becomes possible. If you contest the claim, this will initiate a proper trial. The court then decides on either party or on a compromise, depending on the facts proven.


Normally, a CCJ will come in two forms. The first is by installment. In here, you are required to pay the full amount in increments over a long period of time. This usually occurs if the amount is quite large and this is your first encounter with a CCJ proceeding.

The other is the forthwith judgement. In here, you would have to pay the full amount immediately.

What Happens If You Don’t Comply?

If you still show no sign of complying with the order even with a CCJ attached against you, the lender can ask the court to have you settle your debt in three ways.

Bailiff Action

In here, the lender asks the court to authorize a bailiff to collect the amount you owe in any legal means possible. This will include insisting that you pay the money or seizing any asset to repay the debt.

Charging Order

If you happen to own a property directly due to the loan, the lender can ask the court to attach a charging order. Here, the lender will choose not to pursue you on the amount that you owe. Instead,  your property will be seized and sold under its current market value to fulfill the debt.

Furthermore, you will not be reimbursed for any enhancement or improvement you have made to the property during your ownership of it.

Attachment of Earnings Order

In here, the lender again no longer has to compel you to pay your debt up front. Instead, the court can compel your employer or any agency to directly deduct a considerable amount from your salaries/income. The attachment only lasts until the debt has been paid in full.

What’s Bankruptcy?

Unlike the other actions, this one is initiated by the debtor. By declaring bankruptcy, you are officially stating that you no longer have the means to pay off your debts. Also, your creditors are no longer entitled to take any action to compel you to pay up.

Instead, the responsibility of handling your bankruptcy will be assigned to a court-assigned trustee. That person will then settle and liquidate all your accounts.

What Happens in a Bankruptcy?

When you declare yourself bankrupt, be prepared for a massive downsizing in your home and business. For starters, every usable asset listed as part of your property will be seized and auctioned off. The proceeds will then be used to pay for all of your debts.

So, is declaring bankruptcy tantamount to allowing yourself to be financially bled dry? Not really. You are entitled to keep at least a handful of your properties to maintain a semblance of a home.

This includes your clothes. A few furniture, a handful of utensils, and other important facilities. You might even get to keep a few things from your business depending on the case.

Other Consequences

Also, all your bank and credit accounts will be frozen and handed over to your trustee. However, you are not going to be fully deprived of the means to support yourself financially.

The trustee may also set up an Income Payments Agreement where a part of your monthly income is diverted to pay for your debts. However, this only occurs if all the assets seized from you were not enough to pay for the total debt.

A Word of Warning

Although declaring bankruptcy is one way of releasing yourself from your financial obligations, you cannot use this to simply escape the wrath of your lenders. If you are doing this just to flee from your debts, you will be committing fraud.

As a crime, fraud carries with itself both civil and criminal liabilities. In other words, not only will you still have to pay for the principal amount, you are going to pay for damages as well. Serving time in prison is also not out of the question.

In Conclusion

Either of these three, a CCJ, a default, and a bankruptcy, will have serious consequences on your credit score. As a matter of fact, these will remain in your record for the good part of a decade. This means that you will have to deal with the worst effects they could bring on your history as a credit holder.

Properly and promptly tackling these issues, then, can determine whether you can go through these instances with your financial credibility intact.

Have you been served a default and a county court judgement before? What strategies did you use to negotiate your terms with your lenders? The comments section below is open for all sorts of discussion.