Legal & credit
County Court Judgement (CCJ) explained
What a CCJ is, how you get one, satisfied vs unsatisfied status, how long it stays on your file, and how to have it set aside.
6 min read → Financial difficulty
What happens when you
default on a loan
A clear, stage-by-stage explanation of the process — and what you can do to stop it at every point.
5 min read • Cash Train editorial team
What this guide covers
- Default is a legal status — not just a missed payment — and it follows a defined process
- Regulated lenders must give you a formal default notice and 14 days to respond before escalating
- A default stays on your credit file for six years from the date it was recorded
- There are intervention points at every stage — early contact with your lender is the most powerful one
Stage 1 — Missed payment
The process begins the day a scheduled payment is not received. Most lenders will attempt to collect again within a few days and will send an automated reminder by text or email. At this point, no formal record has been placed on your credit file — it is just an internal arrears flag.
This is the easiest stage to resolve. Contact your lender immediately, explain the situation, and agree a plan. Under FCA rules (Consumer Duty, CONC 7), regulated lenders must treat customers in genuine financial difficulty with forbearance — which can include a short payment pause, a reduced payment plan, or a freeze on interest accrual.
Worked example — Missed direct debit
Sarah has a £500 personal loan with monthly repayments of £85. Her direct debit bounces because she changed bank accounts and forgot to update her details. She receives a text alert the same day. She calls her lender within 24 hours, provides her new sort code and account number, and authorises a manual payment. No arrears are recorded on her credit file and no fees are applied beyond the standard missed-payment fee disclosed in her agreement.
Outcome: resolved at Stage 1 with no lasting credit impact.
Stage 2 — Arrears and late fees
If the missed payment is not resolved, the account moves into formal arrears. Lenders will typically make several contact attempts — phone calls, letters, emails — over the following weeks. Late payment fees and, depending on the loan agreement, additional interest may begin to accrue.
For short-term personal loans from FCA-authorised lenders, the FCA caps the total cost — interest cannot exceed 0.8% per day and the total amount repaid can never exceed double the original loan amount, regardless of how long arrears continue. Cash Train is an unregulated lender and is not subject to FCA HCSTC rules; however, we voluntarily apply equivalent cost caps as a matter of responsible lending policy.
At this stage responsible lenders send you information about free debt advice services, including the government-backed Money Helper (formerly the Money Advice Service) and charities such as StepChange and National Debtline. Cash Train does this as a matter of policy. Engaging with a regulated debt adviser can put obligations on your lender: they should pause or suspend collection activity while a repayment plan is being established.
Stage 3 — Default notice
If arrears continue without resolution — typically after three to six missed payments, though this varies by lender — the lender will issue a formal default notice. For FCA-regulated lenders this is governed by Consumer Credit Act 1974 (Section 87). Cash Train is unregulated, but we issue equivalent written notice giving you at least 14 days to remedy before further action. The notice will:
- State the nature of the breach (i.e. the amount of the arrears)
- Specify what action you must take to remedy the breach
- Give you at least 14 days to remedy before the lender can terminate the agreement or take further action
- Be in the prescribed format — informal letters do not count
If you remedy the arrears within those 14 days — by paying the overdue amount or agreeing a plan — the lender cannot record a default on your credit file. This is a critical window.
Worked example — Using the 14-day window
James fell three months behind on a £1,200 personal loan following a period of reduced hours at work. He received a default notice showing arrears of £210. He contacted StepChange, who helped him prepare an income and expenditure statement. Within the 14-day window, he called his lender with a proposed repayment plan of £40 per month on top of his normal instalment. The lender accepted. No default was recorded. His credit file shows a series of late-payment markers but not a formal default — a meaningfully better outcome for future credit applications.
Outcome: default avoided by acting within the notice period.
Stage 4 — Default recorded and account terminated
If the 14-day window passes without resolution, the lender terminates the credit agreement and records a default on your credit file with the relevant credit reference agencies (Experian, Equifax, TransUnion). From this point:
Six-year credit impact
The default marker stays on your file for six years from the date of default, regardless of whether you later repay the full balance. After six years it is automatically removed.
Credit applications affected
Most mainstream lenders will decline applications while a default is visible. Specialist lenders may consider your case, usually at higher rates.
Full balance demanded
Once the agreement is terminated, the lender can demand the full outstanding balance immediately, not just the arrears. This is sometimes called “acceleration”.
Stage 5 — Debt collection and CCJ
After a default is recorded, the lender will typically pursue collection through one of two routes: instructing a debt collection agency (DCA) or selling the debt to a debt purchaser. Either way, you still owe the same amount — it simply changes who you owe it to. Debt collectors must follow the FCA's CONC rules and cannot harass, mislead, or contact you at unreasonable hours.
If the debt remains unpaid, the creditor can apply to a county court for a County Court Judgement (CCJ). You will receive a claim form — officially a Form N1 — giving you 14 days to respond. You have three options: admit and propose repayment, defend the claim, or admit in part. If you ignore it, a judgement is entered automatically in the creditor's favour.
If you receive a court claim form — act within 14 days
A CCJ entered without your response is called a default judgement. It is difficult to overturn. If you pay in full within one calendar month of the judgement date, it can be set aside (removed from the Register of Judgements). After one month, it remains on the public register for six years even after repayment — though paying marks it as “satisfied.”
Free help completing court forms: Citizens Advice — citizensadvice.org.uk
Stage 6 — Enforcement
Once a CCJ is in place, the creditor has several enforcement options if you do not pay voluntarily:
A court-appointed enforcement agent (bailiff) is authorised to visit your home and seize goods to the value of the debt. Bailiffs must follow strict rules set out in the Tribunals, Courts and Enforcement Act 2007.
The court orders your employer to deduct an amount from your wages each payday and pay it directly to the creditor. A protected earnings rate ensures you retain enough to live on.
If you own property, the court can secure the debt against it. This does not force a sale immediately, but the debt must be repaid if the property is sold.
Money held in your bank account can be frozen and paid to the creditor, subject to court approval.
The full timeline at a glance
Day 1+
Missed payment
Contact lender now — no credit file impact yet
Week 2–8
Arrears accumulate
Seek free debt advice; engage with lender forbearance options
Month 3–6
Default notice issued
14-day window to remedy — most powerful intervention point
After 14 days
Default recorded
Credit file impacted for 6 years; negotiate repayment to minimise further escalation
Ongoing
Debt collection / CCJ
Respond to all court documents within 14 days; get legal advice
Post-CCJ
Enforcement
Negotiate with enforcement agent; apply to court to vary CCJ payment terms
Free, regulated debt advice in the UK
StepChange Debt Charity
— Free debt management plans and individual voluntary arrangements (IVAs).
National Debtline
— Free telephone and online debt advice for individuals.
Money Helper
— Government-backed service — budgeting tools, debt advice locator, impartial guidance.
Citizens Advice
— Local and national advice on debt, court claims, and benefits.
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Common questions
FAQ
A default occurs when you fail to make the required payments on a loan and the lender formally closes the account as unpaid. Lenders typically issue a default notice before registering a default — giving you time to catch up. A default stays on your credit file for six years.
Contact your lender immediately. Lenders are required to treat customers in financial difficulty fairly. Many will offer a payment holiday, reduced payments or a repayment plan. The earlier you contact them, the more options are available. Free advice is available from StepChange (0800 138 1111) and Citizens Advice.
Yes, though it is harder and rates will be higher. Some lenders specialise in applicants with adverse credit history. The impact of a default diminishes over time — a default registered six years ago has far less weight than one from six months ago. Once six years have passed, the default drops off your file entirely.
A missed (or late) payment is recorded each month you are late. After a series of missed payments — typically three to six months — a lender may issue a default notice and register a formal default on your file. Both affect your credit record, but a formal default has a more significant impact.
Ready to take the next step?
Cash Train offers straightforward short-term personal loans designed around responsible lending. Apply online today and get a fast decision.
Apply nowWarning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk