For many individuals, their first encounter with a default judgment is when they find a CCJ on their credit file. This can be a confusing and distressing experience, especially if they are unaware of what a default judgment is or how to address it. This article will explain default judgments, why they occur, and the steps to take if you find one on your credit report.
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What is a Default Judgment?
Default judgments are court orders that arise when a defendant does not respond to a legal claim. These judgments can have far-reaching consequences, affecting a person’s financial stability and credit score. Understanding the mechanics and implications of default judgments is essential for anyone who might be facing legal action.
A default judgment occurs when a defendant fails to respond to a claim filed against them. Here’s how the process typically works:
- The claim form is issued: The claimant initiates legal proceedings by sending a claim form to the court.
- Notification: The court then sends this claim to the defendant, who has 14 days to respond.
- Non-Response: If the defendant does not respond within this period, the court automatically orders the defendant to pay the claimed amount—this is the default judgment.
If the defendant acknowledges the service within the initial 14 days, they get an additional 14 days to submit a defence. Failure to provide a defence within this extended period also results in a default judgment.
Legal Implications of a Default Judgment
A default judgment is a type of CCJ (County Court Judgment), so it’s a serious matter and can be enforced like any other court order. Ignoring it can lead to severe consequences, including:
- Mortgage Problems: Many lenders won’t provide a mortgage to people with a CCJ registered against them
- Bailiff Actions: Bailiffs could be sent to seize your possessions to satisfy the debt.
- Job Prospects: In some professions, employers require staff to have a clear credit record. A CCJ could mean being refused work.
Common Scenarios Leading to a Default Judgment
Receiving a default judgment typically indicates that the court believes you received the claim form but did not respond. This may come as a shock, especially if you were unaware of any claim against you. Common reasons include:
- Incorrect Address: The claim may have been sent to a previous address if the claimant was unaware you had moved. Consequently, you might not have received the claim form and were unable to respond.
- Timing Issues: Even if the claim was sent to the correct address, you might have been away at the time. If you didn’t return in time to respond, you may have missed the deadline, resulting in a default judgment.
- Business Address Mix-Up: For limited companies, claims might be sent to the registered address instead of the trading address. If there are inadequate forwarding arrangements, the claim might not reach the correct location in time.
How to Remove a Default Judgment
A default judgment is an administrative action by the court, carried out by court staff rather than a judge. This puts it in a different category from other types of judgments. There are three ways to remove a default judgment:
- Paying the Judgment: If the judgment is less than a month old, paying it can remove it from your credit file.
- Automatic Removal: A default judgment will automatically be removed from your credit file after six years.
- Applying to Set Aside: If the judgment is over a month old and you cannot wait six years, you can apply to have the CCJ set aside. A judge will review the case and make a decision. Valid reasons for setting aside a judgment include not receiving the claim form initially. Sometimes, the claimant might consent to the judgment being set aside, potentially avoiding a court hearing.
Preventative Measures
To prevent default judgments in the future, consider these steps:
- Keep Addresses Updated: Whenever you move house, ensure all relevant parties, including the DVLA, have your current address.
- Set Up Mail Forwarding: If you move, set up mail forwarding to catch any important documents.
- Respond Promptly: Always respond to legal documents within the stipulated time frame.
- Seek Legal Advice Early: If you receive a claim form, consult with a lawyer immediately.
FAQs about Default Judgments
How long does a default judgment stay on my credit report?
A default judgment remains on your credit report for six years unless paid within a month or set aside.
Can I appeal a default judgment?
You cannot appeal a default judgment, but you can apply to have it set aside if there are good grounds.
What happens if I ignore a default judgment?
Ignoring a default judgment can lead to a damaged credit history, which could make it difficult for you to obtain credit, such as a mortgage. It may also result in bailiffs visiting your property to seize goods.
Is it possible to negotiate the amount of a default judgment?
Yes, creditors sometimes agree to settle for a lesser amount. However, that won’t remove the default judgment from your credit report unless it is set aside.
How do I prove I didn’t receive the claim form?
Provide evidence such as a change of address confirmation, travel documents, or a witness statement.
Can a default judgment affect my employment?
While it generally doesn’t affect current employment, it can impact future job opportunities, especially in the financial sector.
Conclusion
A default judgment can significantly impact your credit rating and financial situation. Understanding what it is, why it occurs, and how to address it is crucial for managing your financial health. If you find a default judgment on your credit file, take prompt action to resolve it, either by paying the judgment, waiting for it to be removed after six years, or applying to have it set aside.
Andrew Crisp is the Principal Solicitor at Mason Bullock Solicitors, where he specialises in employment law and dispute resolution. With over two decades of legal experience, Andrew has built a reputation for his expertise in advising employees on settlement agreements and helping clients navigate complex litigation processes, including the removal of County Court Judgments (CCJs).