When a lender takes you to court, this is known as a County Court Judgment (CCJ). It is often seen as a last resort. Because of this CCJs are taken very seriously. Consequently if you have a CCJ you’re more likely to be turned down for a loan.
The other form of legal action taken against a borrower is called insolvency. This can include bankruptcy. Borrowers can also apply for an Individual Voluntary Arrangement or Debt Relief Order. Insolvency will make it really hard to get a loan. In fact, there are legal limits to how much you can borrow if you are going through insolvency. Additionally, insolvency can impact your job.
Tip: if you are considering bankruptcy or facing legal action by a lender, seek advice.