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Defaults, CCJs, bankruptcies: what to do if you have one

We take a look at defaults, CCJs and bankruptcies. What they are, they affect your credit score and what to do if you have one.


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If you have a default, CCJ or bankruptcy on your credit report, don't panic. Here we explain what they are in detail, and the steps you can take to get your credit score back on track.

What are they?

If you miss a payment on a debt that you owe, that debt may eventually go into default. This means the lender has decided you are not going to pay back your debt. At this point, the lender has ended the agreement you have with them, and can take further action to collect the debt.

Every lender will have different rules for how many payments you’re allowed to miss before they will declare your debt as ‘default’ and send you a default notice. Some lenders will allow you to miss up to 6 payments, but for some lenders you may only be able to miss two payments.

Your account can only default once, but once this has happened it will be noted on your credit report. This means any lenders that look into your account in the future (for example when you’re applying for a new loan) will be able to see you’ve defaulted on a previous debt.

How long do they stay on your report?

The information about your default will stay on your report for six years, even if you eventually paid off this debt. While it will affect your ability to get credit, lenders pay less attention to defaults as they get older.

What should you do if you get one?

If your account is about to go into default, you’ll get a letter called a default notice which says how much money you owe. If you pay this within two weeks, your account will carry on as normal. If you can’t pay within this time, your account will go into default.

If you get a default notice or your account goes into default, don’t panic. You can get free advice from charities like StepChange, Debt Advice Foundation or National Debtline. They’ll listen to your situation and put together a repayment plan for you.

Because defaults appear on your credit report, it may be harder, at first, to get accepted for any more credit (i.e. credit cards, mortgages and loans). This is because lenders will see you as a greater risk as you’ve previously failed to pay back a debt. Even if lenders do approve your application for credit, you may only be offered the more expensive interest rates.

Defaults don’t last forever - the older the default gets, the less it will affect your ability to get credit. And after six years, a default will drop off your report completely, even if you haven’t finished paying it off.

What are they?

CCJ stands for ‘County Court Judgement’, which is a type of court order directing someone to repay an outstanding debt. Lenders can get one against you if any of your accounts go into default. It’s their way of getting you to pay.

How long do they stay on your report?

CCJs stay on your credit report for six years. Your CCJ will also show on a public database called the Register of Judgments, Orders and Fines for six years.

If you pay the full amount of the CCJ within a month, you can get the CCJ removed from your credit report and the public register by applying to the court with proof of your payment (StepChange has instructions on how to do this).

If you pay the full amount after a month, you can get the CCJ marked as ‘satisfied’ on the public register, which will in turn show on your credit report. You can do this by applying to the court in the same away as above. If lenders see that your CCJ is ‘satisfied’, they may be more likely to lend to you.

Remember that lenders will pay less attention to CCJs the older they get.

What should you do if you have one?

When a lender starts court action, you’ll get letter in the post called a County Court form. It’s important to open this straight away, as you have two weeks to respond. There’s information on how to reply to a County Court form on the StepChange website.

If you are sent a CCJ, it’s best to get free debt advice from a charity like StepChange, Debt Advice Foundation or National Debtline so they can help you with your payment plan.

Once your payment plan is agreed, make sure you pay your instalments on time every month. To prevent missing a payment, you can set up a standing order with your bank to transfer the money to the lender’s account.

Having a CCJ will affect your credit score, so it may be harder to get credit and you may be offered higher interest rates. However, once it is paid, lenders will pay less attention to it, and it will completely drop off after six years.

Once your debt is under control, you can take out a credit builder product to help you repair your credit score.

What are they?

Bankruptcy is a way of dealing with debts you can’t pay. If you are declared bankrupt, you are legally declaring that you cannot afford to pay off your debt. When you go bankrupt, your unsecured debts are written off. It’s seen as a last resort, because assets such as your house or car can be sold to pay your debts.

You can either go bankrupt voluntarily, or a lender can make you bankrupt if you owe £5000 or more and you haven’t agreed a way to pay.

Bankruptcies usually last for 12 months, and you’ll have many financial restrictions during this time. After a year, you are ‘discharged’.

If you’re thinking about going bankrupt, get free advice first from a charity like StepChange, Debt Advice Foundation or National Debtline so they can help you with your payment plan. They’ll be able to go through your options, as bankruptcy is not for everyone.

How long do they stay on your report?

Bankrupties stay on your credit report for six years. The older the bankruptcy, the less attention lenders will pay to it.

What should you do if you have one?

If you have gone bankrupt, you must follow the restrictions for 12 months until your bankruptcy is discharged. If you can afford it, you may be asked to make monthly payments from your spare income. This is called an Income Payments Agreement (IPA) and can last for three years.

After 12 months, or when your bankruptcy is discharged, you can start to rebuild your credit history. You can do this by taking out a credit builder product, spending small amounts on it and always paying it back in full.


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