Is my home at risk if I enter into a Debt Management Plan?

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If you are a homeowner in debt ensuring your home is secure is one of the biggest priorities; it is because of this that many people avoid bankruptcy. An alternative solution, such as a Debt Management Plan, may be more suitable.

Your home would only be at risk from your creditors if you failed to maintain payments towards your debt, in which case creditors would still need to follow a series of steps. They would firstly need to issue a default notice against your account. If you continue to miss payments, or make reduced payments, they would need to successfully obtain a County Court Judgment. If you then fail to maintain payments towards this they could apply for a Charging Order against your property.

A DMP enables you to repay your creditors at a rate you can afford; we would propose a level of repayment to each of your creditors based on your income and expenditure. Your creditors are then asked to accept the repayment plan. Once it has been set up, as long as you maintain all the payments into your plan as agreed, your creditors are less likely to pursue any legal action against you, however this is not guaranteed.

Worried about your home and your debts?

If you’re concerned about how a Debt Management Plan could affect your home, we’re here to help. Get free, confidential debt advice online or call 0800 316 1833 to speak with one of our expert advisors. We’ll explain your options, answer your questions and help you find the debt solution that’s right for your situation.

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FAQs

Why do I have to change my bank account?

If you have a current account with a company you owe money to, you will be required to open a new bank account. This is not only the case with a DMP but you should change your bank account if you are going to make reduced payments to a company that you also bank with. Banks have the “Right to Offset” so any money in your current account could be used to pay another debt with the bank.

Will I have to live on a tight budget during my Debt Management Plan (DMP)?

To enter into and maintain a successful Debt Management Plan you will need to live within a budget, however this is discussed with you openly. PayPlan are required to submit your income and expenditure details to your creditors.

Remember that when we’re negotiating your DMP, it is in your interest if we can show your creditors you are prepared to stick to a realistic budget to help repay your debts.

Will I have to tell my partner about the Debt Management Plan (DMP)?

We offer an absolutely confidential service from start to finish, so PayPlan will never force you to tell your partner about your debt situation, although support is available if you wish to tell them.

A DMP doesn’t usually affect your partner’s credit rating, but if you have a financial association, such as shared debts or guarantor debts, then it could do.

Whenever we contact a client we take great care to avoid divulging the nature of our call to anyone but the client.

Which debts are included in a Debt Management Plan (DMP)?

A DMP will only help you make reduced payments to your unsecured creditors, therefore the debts that can be included are:

Personal loans (loans taken to purchase cars are fine but Hire Purchase (HP) agreements cannot be included as they are secured against the item being purchased)
Credit cards
Store cards
Catalogues
Overdrafts

Secured debts can’t be included in DMPs because any payments on secured debts that aren’t met in full, can lead to the goods being repossessed. This website provides details on house repossession and car repossession, which are all consequences of not maintaining mortgage or hire purchase payments.

Is my home at risk if I enter into a Debt Management Plan (DMP)?

A Debt Management Plan is an informal arrangement which is not legally binding and although having a DMP could reduce the chance that the property would be at risk, there is a chance a creditor could take legal action such as securing a charging order on the property. This would secure the debt and a creditor could force the sale of the property at any point during a debt management.

Is my home at risk if I enter into a Debt Management Plan?

Worried about your home and your debts?

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