What is a Debt Relief Order and how does it work?
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We know that dealing with bailiffs can often be very stressful and upsetting. Could a debt management plan help you avoid it?
The government recently announced it will investigate how better to protect people against bailiffs. This comes after charities, debt advice providers, and many other organisations who come into contact with bailiffs and debt collectors, raised concerns about the way some firms and individuals operate.
Bailiffs can only visit you if they are instructed to do so by the court. This usually happens in the case of tax debts, court fines or debts related to a business. They’re very unlikely to be instructed for consumer credit debts, like loan, credit card or catalogue payments. (An exception to this is if you have defaulted on a CCJ.)
Sometimes a debt collector may turn up at your property claiming to be a bailiff. These people do not have the powers to enter your property or take anything away.
What if you are visited by a real bailiff? They cannot legally break into your property unless they are collecting unpaid magistrate’s court fines, HMRC debts or business debts. For all other debts, it’s important to remember that bailiffs can’t come into your property unless you let them in. (They can enter through unlocked doors or windows, however. You can find more information about bailiffs’ powers here.) You’re most likely to be contacted by a bailiff regarding council tax debt. If this happens, don’t let them in and don’t sign anything. But don’t panic, either. Just get expert debt advice straight away.
About debt management plans
Debt Management Plans are designed for people who cannot afford to repay their unsecured debts at the originally agreed rate. Here’s what the process involves if you contact Gregory Pennington:
- Your debt advisor goes through all of your income and expenditure with you. Together you work out how much you can afford to pay off your debts, while still paying for all your essentials.
- Your debt advisor will deal with all your creditors for you. (‘Creditors’ are the people or organisations to whom you owe money.) They will contact your creditors to explain the situation and how much you're able to pay. They will also ask them to stop adding interest and charges to your debts.
- If you stay on your debt management plan until the end, all of your debts will be paid off in full.
Is it the right solution for you?
A debt management plan isn’t legally binding. (The exception is a Debt Arrangement Scheme. This is a kind of legally binding debt management plan currently only available in Scotland. The government is currently consulting on a proposal for a similar scheme in England and Wales. Click here to read about it.)
This has some advantages. For example, it gives you more flexibility if you start a debt management plan but then your circumstances change. Creditors don’t have to accept the offer of payment made through a debt management plan – but they usually do if your debt advisor can show them full details of what you can afford to pay.
So will your creditors take the debt back from bailiffs if you start a debt management plan? It really depends on your circumstances – the only way to know for sure is to get expert debt advice. If it turns out that a debt management plan isn’t what you need, there are other solutions that might be better for you. Take a look at our debt solutions page to get a better idea of what’s out there.
If you need help
A letter or visit from a bailiff or a debt collector is one sign that you need expert debt advice. And it’s never too late to get help. But you will save yourself a lot of money, time and stress if you get help to deal with your debts before they reach that point. That could be through a debt management plan or a formal debt solution. You can see what options may be suitable for you here. Alternatively, the Money Advice Service also has information on the debt solutions open to you.
by Christine WalshBack to blog home