How a debt management plan can stop your home being sold to pay a credit card debt!

Well if you were one of the millions that watched in horror the Panorama programme on the BBC, entitled, “can’t pay, wont pay”, you will probably have not fully recovered from the content.

For the benefit of those of you that missed the documentary, the following is the basis of the production.

If you owe somebody money, for example a bank, a credit card company or maybe a utility; all unsecured and deemed by the CAB to be “non-priority debts”, if you do not pay, these companies can apply to the court to have a CCJ entered against you.

Fair enough, but if they still don’t receive their money, the creditor can apply to the courts for a Warrant of Execution. This allows a court bailiff to visit your property and attempt to satisfy the judgement amount by seizing goods to the value of the judgment.

If, as in many cases they are unable to do this, the creditor can get real nasty, and apply to the courts for a Charging Order, charging your property with the debt; effectively turning an un-secured debt into a secured debt. If still you fail to pay, the creditor can petition the court for an order for sale.

So it seems that non-priority debts can quickly become priority debts (these are debts that the CAB, view as those that can lose you your liberty or the roof over your head).

Truth is all debt needs to be dealt with, and quickly. Nothing winds a creditor up more than silence. If you have mounting debt that is becoming; or is unaffordable, there may be a “white knight” that can help you out of misery.

It’s called a Debt Management Plan or DMP for short.

What is a Debt Management Plan?

It is not Bankruptcy, an IVA or anything connected to the Insolvency Service or the Law Courts.

Debt management companies negotiate directly with the finance companies and other creditors, communicating offers using a form of monthly budgeting statement; that if reasonable, should be accepted; thus reducing credit and loan repayments to an affordable level.

A Debt Management Plan, works by distinguishing to a creditor, a genuine case of can’t pay, rather than won’t pay.

Many money advisers will, after a twelve month period, make on your behalf; a full and final settlement. Amazing as it sounds, a 5K secured loan, can settle 10K worth of debt. This is in the Debt Management Plan manager’s interest, you are off of their book and they can divert time and effort to new cases.

Debt management companies take the initial flak for you; the nasty letters will stop. Once fully on a Debt Management Plan, the stress will simply melt away.

Don’t try and wrestle with unaffordable debt, get a firm grip on it, by checking out a Debt Management Plan.