What Are the Differences Between Bankruptcy and a CCJ?

Bankruptcy is never a nice position for anybody to find themselves in, let alone receiving a county court judgment or “CCJ”. 

But some things, if not unavoidable, can be eased when helping to overcome these unforeseen circumstances. Educating yourself about them can help to put you in a less vulnerable position and give you access to much faster solutions.

What is a CCJ?

A county court judgement is issued when your creditor takes you to court for non-payment of debts you may owe. 

County court judgements are issued when the court deems it necessary, after formally reviewing if the case against you requires the issue of a CCJ; this will often occur if your creditor has contacted you about receiving money for these debts but has had no response from you.

What is Bankruptcy?

Bankruptcy is declared as a last resort when you cannot pay off a debt, your debts are cleared as a final solution.

Different circumstances can lead to declaring bankruptcy. These include:

  • There is no possible way to pay the money owed to the creditor, and you want to declare yourself bankrupt.
  • The creditor demanding payment from you applies to declare you bankrupt because you owe them £5000 or more. 
  • an insolvency practitioner makes you bankrupt because you’ve broken the terms of an individual voluntary arrangement (IVA).

Key Differences Between Bankruptcy and CCJs

When issued with a county court judgement, your debts are not cleared. However, once declared bankrupt, debts are cleared. 

Despite any debts being cleared, bankruptcy does not come without any limitations. Although declared bankruptcy aims to allow an individual to start afresh with no lingering debts, it may lead to losing some of your assets. Your bankruptcy trustee will then sell any items chosen to pay back your bankruptcy debts. 

Suppose a CCJ has previously been issued to an individual but has later been declared bankrupt. In this case, the original CCJ will be visible on a credit record for the following six years. Though bankruptcy may seem the more suitable option for a debt-free life, a lingering CCJ could lead to future setbacks, such as making it difficult to get credit.

Why do Employers Check for these on a Credit Search?

When choosing to hire a candidate, employers may choose to perform a credit check or credit search. Though many employers usually undertake a criminal record check, Credit Checks do not form part of a criminal record check.

A company may perform a credit check for employment before hiring a candidate to ensure that your financial position won't affect your performance within the business. 

Reasons for performing a pre-employment credit check include ensuring you do not impose an increased risk within the company when trusted with sensitive information and money. Another reason may be to judge if a potential employee has signs of excessive debt or past financial mismanagement.

A credit search can reveal multiple aspects of an individual’s credit history, including any unpaid bills turned over to a collection agency, past and current bankruptcies, a credit accounts record, and payment history.

How Can Both Affect your Job Prospects?

Past unsolved discrepancies on a credit check can hugely impact future job prospects, especially in jobs that require a vast amount of trust.

A company can deny employment if an employer feels a candidate’s financial situation is not secure or cannot trust the candidate. Jobs following strict GDPR regulations often require a tremendous amount of trust from their employees; the same goes for individuals who regularly handle large sums of money.

Many jobs are not affected if you go bankrupt whilst employed but may have consequences within employment. For example, you may not be permitted to engage in certain tasks you may have been able to complete previously, such as handling money or sensitive information, due to a change in your financial situation.

Pre-Employment Screening Checks From Eurocom C I

If you are an employer looking to apply for a pre-employment screening check, whether it be a criminal record check or Credit Check, or have recently found yourself bankrupt or with a CCJ, Get in touch to find out more about our services. We are experienced in carrying out a multitude of pre-employment checks across many different sectors.