How can a CCJ affect me personally?

Updated: 20th February 2020

When a County Court Judgment (CCJ) is issued against your company, it can have serious ramifications. If it remains unpaid the creditor may submit a winding up petition to the court, which is likely to mean closure for your business.

Clearly, this will also have a significant effect on you personally, but it’s potentially not the only effect. So what are some of the issues at stake?

Will I become personally liable for my company’s debts?

It’s unlikely that you’ll be held personally liable for the money owed by your company in this situation, unless you’re found guilty of wrongdoing. A County Court Judgment, although not directly a threat to your business, can form part of a creditor’s plan to wind up the company and often precedes a winding up petition. If a company is subsequently liquidated, investigations into the conduct of directors take place, which is when personal liability can become an issue.

Will the company CCJ affect my personal credit rating?

The County Court Judgment against your company shouldn’t affect your own credit rating. If your personal accounts are held at the same bank as the company’s, however, your ability to borrow may be compromised.

This could affect any new personal lending you apply for, such as fixed term loans, mortgage, or ongoing overdraft facilities. Holding credit cards with the same banking institution may also be an issue after the CCJ has been issued, and your credit limit could be restricted.

Another factor the bank may take into account if they’re aware of the CCJ against your company is the potential instability of your own personal income, particularly if your only source of income is derived from the business.

Knock-on effect of a County Court Judgment on me personally

Creditors apply for a CCJ against a company when they’ve made several unsuccessful attempts to collect payment of a debt. They may ultimately have forced liquidation in mind, as this type of court judgment often precedes an application to wind up a business.

An unpaid CCJ may quickly result in enforcement action being taken by the creditor, and the resulting bad publicity is only one factor that can negatively affect both sales and your company’s reputation.

Suppliers could withhold further credit facilities, forcing the company to pay in advance or seek alternative suppliers. This general downward trend can be very stressful to deal with, particularly if the business was once profitable.

What can I do to improve my situation?

Professional intervention and guidance can clarify the situation that your company is experiencing, and help you make the right decisions. Licensed insolvency practitioners help businesses regain their financial stability and can provide invaluable insight and expertise.

Expert advice also helps to protect your own personal finances and position as a director, as well as making sure you meet all your obligations in law.

If you would like more information on CCJs and how they might affect you personally, please get in touch with our team of experts at Begbies Traynor to arrange a free same-day meeting. We operate an extensive network of offices nationwide, so you’re never far away from professional help.

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