Can an IVA include a CCJ?
Yes, a County Court Judgement debt can be included in an IVA.
Insolvency law states that when someone enters an IVA, all their unsecured creditors must be treated equally, with no advantage being given to any.
This is even the case when a creditor has obtained a County Court Judgement, or CCJ.
What is a CCJ?
Under the Consumer Credit Act, 1974, if you fail to maintain your contractual debt repayments, your credit agreement will fall into default.
Once your credit agreement is in default, that creditor can seek the Court's permission to recover the debt through legal enforcement.
This is known as obtaining a County Court Judgement (CCJ).
Once a CCJ has been obtained, you have 30 days to settle the outstanding debt in full. If it is settled within this time frame, the CCJ will not appear on your credit file.
If, however, the debt hasn't been repaid in full after 30 days, the CCJ will be recorded on your credit file and will begin to have an adverse impact on your credit rating.
Once obtained, a CCJ will remain on your credit file for 6 years.
Existing CCJs in an IVA
If you enter an IVA, it has the effect of nullifying the power of any CCJs on your credit file.
The judgement debt must be included within the IVA, along with all other unsecured debts, which has the effect of removing that creditor's priority.
If a repayment arrangement exists with CCJ creditor before the IVA begins, it will need to be terminated once the IVA has been accepted, as no preference can be given and all creditors must be treated equally.
The CCJ creditor will then receive dividend payments from the IVA, based on their share of the outstanding debt, in line with all your other creditors.
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