DMP CCJ – All You Need to Know, FAQs & More
Debt solutions such as Debt Management Plans (DMPs) are meant to protect you from legal action while you make reduced payments to your creditors.
That being said, a debt management plan is an informal agreement and it may not be able to protect you in the same way a formal agreement like an IVA does.
In this post, I’ll be discussing County Court Judgments (CCJs) in regards to DMPs and whether they can be included in it or not.
What is a County Court Judgment (CCJ)?
One example of court action that your creditor(s) can pursue against you is known as a County Court Judgment (or CCJ).
A CCJ is a court order which obligates you to make payments towards your debt(s).
Not making payments towards your CCJ can have very dire consequences, e.g., bailiffs could be sent to your home who could seize your belongings and sell them off.
When a creditor files for a CCJ against you, you will receive a county court claim form. You have about two weeks to respond to this form. It’s very important that you do so because if you don’t, the court may order you to pay back the debt at a rate you can’t afford.
It’s important to not panic when you receive a CCJ. As long as you communicate with the court, you will only be obligated to make payments that you can afford.
Your CCJ will appear on your credit file for six years and thus, will have a negative impact on your credit score for these six years.
Can a Creditor Get a CCJ Against Me While I’m in a DMP?
A debt management plan (DMP) is not a formal agreement. This means that you are not protected from legal action by your creditors when you enter into a debt management plan.
While a DMP is an informal debt solution and your creditors can pursue legal action against you, this is quite rare as long as you stick to your monthly payments and submit them on time.
When you enter into a DMP, a copy of your income details, expenditure as well as debts are sent to your creditors. This assures them that you are making payments that you can realistically afford.
When creditors apply for a CCJ, the court uses similar information to determine what your monthly payment would look like. Thus, creditors are very unlikely to get a CCJ against you if they know they’re not guaranteed to get a higher payment amount than what they’re already getting from your debt management plan.
Why Would a Creditor Pursue a CCJ Against Me While I’m in a DMP?
As I mentioned earlier, your creditor(s) may pursue a CCJ against you while you’re in a DMP if they feel that they might be able to get a higher monthly payment amount from you in a CCJ as compared to a DMP.
A creditor may also do this if they want to apply for a charging order against you. A charging order obligates you to secure the debt you owe to that creditor against your home.
Many creditors prefer getting a CCJ against debtors because this gives them an extra guarantee that they will be regular with their payment(s).
What Should I Do if a Creditor Pursues a County Court Judgment Against Me While I’m in a DMP?
If a CCJ gets taken out against you while you’re in a DMP, it will get added to your credit file. Make sure that you make your DMP provider aware of this so that they can make necessary adjustments to your monthly payment amount if any.
If a CCJ gets added to your total debt while you’re already in a DMP, then this debt will have to be treated as a priority debt.
A priority debt is a debt that you need to attend to first as missing payments to those debts can have severe consequences.
This means that if at some point, you can only make a payment towards your DMP or your CCJ, then you should make the payment towards your CCJ and then talk to your DMP provider in order to work something out.
Can I Include CCJ Debts in My Debt Management Plan?
As I mentioned earlier, CCJs are a formal and legally binding agreement obligated to you by the court. On the other hand, a DMP is an informal agreement between you and your creditors that is negotiated by a DMP provider.
As a result, if you have a CCJ and you decide to start a DMP, your CCJ debts will not be automatically included within the DMP.
Thus, you have two options:
- Keep making payments towards your CCJ separate from your debt management plan.
- Take actions to get the CCJ included in your debt management plan.
For the first option, your payments towards your CCJ will be termed as “essential costs” within your debt management plan. Thus, your DMP provider will make sure the payment you make towards your DMP each month are affordable to you given the fact that you’re paying your CCJ debt separately.
For the second option, you will typically need to apply in order to change the amount you pay towards your CCJ so that it can be included within your debt management plan.
In order to do this, you’re going to need to send an application to the court using an application form known as N245.
The court will then take a look at your application and determine whether or not your payment amount should be changed.
If the court agrees to change the payment you make each month, they will issue an instalment order. After this, you can start paying back your CCJ debt as part of your DMP.
I highly advise that you seek debt advice from a professional if you’re going to do this as it can be tricky dealing with creditors and the court. Your DMP provider should be able to advise you about what actions you should be taking and when.
You can also seek advice from a debt charity such as Stepchange or Payplan. Just make sure that whatever agency you seek advice from is authorised and regulated by the Financial Conduct Authority (FCA).
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You may find it difficult to address your CCJ debts if you enter into a DMP but there definitely are ways you can explore to get them included in your informal payment plan.
I hope you found this information useful. Contact me if you need any more details.