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worried
Junior Member

12 Posts

Posted - 15 Feb 2011 :  19:10:08  Show Profile  Reply with Quote
Hi, Am new here and been reading all the topics and they have been really helpful and answered some but not all questions i have so here goes!

I am a married mum of 4 and myself and husband recently (August 10) entered into a DMP. We currently have debts of approx ?26,000 and are paying ?753 per month into the plan which i have been told is really good amount and we should be debt free within 2yrs 6mths. Our DMP has already seen 2 of our 13 debts settled however we have recieved a court claim form over the weekend from one of our creditors for ?8,000. we have filled the form in and sent off to DM for them to deal with however my main worry is as a homeowner we will be forced to sell our home. We are upto date with our Mortgage, C.Tax Etc... so is it possible for this to happen. A majority of debts are small however we have a couple of huge ones with 2 companies and these are the ones worrying me!!

Mnay thanks

Debt Management Advisor
Debt Management Expert



366 Posts

Posted - 15 Feb 2011 :  20:54:12  Show Profile  Reply with Quote
Hello worried and welcome to the debt management plan forum.

Sometimes creditors will take legal action during a DMP where they either want to "secure" their debt by way of a "Charging Order" or if they believe that they are being treated unfairly in some way.

I'm extremely surprised that a creditor has taken such action against you given that you are making such a substantial payment towards your debts each month. It would appear that, assuming your debt management plan is working in the conventional way, they can expect to get all of their money back very soon without any need for legal action.

A charging order effectively secures the debt upon your home in a similar way to a mortgage. You can still repay the money as normal and the charge will be removed once the debt is cleared.

To force the sale of your home a creditor would have to take legal action against you in the first instance and then either seek your bankruptcy or an "order for sale". I find it really hard to see why a judge would allow either of these things to happen as they appear to be entirely unnecessary in the circumstances.

I would suggest that you retain control over the completion on the Court paperwork and, if at all possible, seek legal advice directly rather than relying on your DMP provider.

Can I confirm that your DMP provider is distributing your payment fully every month rather than allowing some of it to build up in a fund to try and reach short-settlements with your creditors later?

I am a CertDR qualified Debt Advisor. I advise on all of the available UK debt solutions. For advice on all of your options please click here:
   
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worried
Junior Member

12 Posts

Posted - 16 Feb 2011 :  08:58:11  Show Profile  Reply with Quote
Hello and thank you for your reply....The DMP providers are only making nominal payment of a ?1 to each our creditors in order to build up a fund ...I am assuming that this is so that when this happens and they then give them a more realistic offer they accept however i feel i could have paid my creditors a ?1 and done the same thing!! I am really worried now :(
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Debt Management Advisor
Debt Management Expert



366 Posts

Posted - 16 Feb 2011 :  09:14:09  Show Profile  Reply with Quote
Hi worried.

I think your creditors are taking this legal action because they believe you have the ability to make a payment to them each month, but in fact you are making a nominal payment only. I wondered if this might be the case when I asked the question previously as it is HIGHLY unusual for a creditor to take legal action in your circumstances where there is a conventional DMP running.

A conventional debt management plan distributes your full payment (minus the management fee if it's a commercial provider) every month. Under OFT rules this should happen within five days of the DMP company receiving cleared funds from you.

I'd suggest that you give serious consideration to switching to a conventional debt management plan provider who would ensure a proper full payment reaches your creditors every month. You may also wish to approach the lender that has initiated Court action to see if they'd call it off if there was an agreed payment program in place.

I am a CertDR qualified Debt Advisor. I advise on all of the available UK debt solutions. For advice on all of your options please click here:
   
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worried
Junior Member

12 Posts

Posted - 16 Feb 2011 :  09:39:02  Show Profile  Reply with Quote
I will ring my DMP today and ask if they change the plan so my money is shared evenly as i dont want to change so soon in as the first 3mths went on fees and if i was to change to another company then the same will happen i think which means creditors will not recv there monies again. Is this the case?
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Beverley Budsworth
Debt Management Expert



251 Posts

Posted - 16 Feb 2011 :  09:39:29  Show Profile  Reply with Quote
Hello Worried,

As Debt Management Advisor has already said, the reason legal action is likely to be taken, is that your creditors probably know that you can afford higher and are only receiving ?1.00 a month.

I would also recommend that you seriously consider changing to a conventional DMP, as even if you do save up a fund to loook at settling in the future, there is no guarantee creditors will settle, due to low contributions.

Also if CCJ's are in place, creditors are more likely to reject settlements, as they have a security on the debt to recover the full amount.

I am a Insolvency Practitioner and Managing Director of The Debt Advisor. To contact me about Debt Management Plans, IVA's or general debt advice please click here:
   
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Debt Management Advisor
Debt Management Expert



366 Posts

Posted - 16 Feb 2011 :  09:56:45  Show Profile  Reply with Quote
Hi worried.

You would be correct in stating that further upfront fees would result in a further period of non-payment to your creditors which, in the circumstances, is obviously to be avoided.

One way to avoid this would be to approach CCCS who do not charge fees to run a debt management plan (they receive payment from creditors for their work).

Some commercial DMP providers now offer to take on clients who are unhappy with their existing debt management operator without charging any upfront fee. This would also ensure payments are made soon. Phil's company offers this service and I think that there are plenty of others that do as well if you were to take a look around some websites.

I am a CertDR qualified Debt Advisor. I advise on all of the available UK debt solutions. For advice on all of your options please click here:
   
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worried
Junior Member

12 Posts

Posted - 16 Feb 2011 :  10:04:14  Show Profile  Reply with Quote
Hello and thank you so much for your quick responses

I have just spoken with my DMP provider and i have expressed my concerns and asked them to make realistic pymt offers to the creditors...I advised how we are upto date with everything ie mortgage etc... and to start receiving claim forms which i feel could have been prevented is really daunting and worrying!! They have advised they will get onto it today so fingers crossed i will see how I go but if no joy then will have to consider moving over to someone else! I wish i had found this site sooner :(
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Phil Corfield
Debt Management Expert



897 Posts

Posted - 16 Feb 2011 :  12:25:53  Show Profile  Reply with Quote
Hello worried

Just on the back of what the other forum experts have said, make sure you know exactly how your current DMP will work going forward. Do they intend to only pay this one debt who are pursuing court action or are they going to start paying each creditor their pro-rata amount due to them from what you pay?

Best of luck & I hope you can stave off the court action.

I am a CertDR qualified Debt Advisor and a Director of Bright Oak.
To contact me about a debt management plan or general debt advice please here:
   
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worried
Junior Member

12 Posts

Posted - 16 Feb 2011 :  12:44:44  Show Profile  Reply with Quote
Hello,

I have asked them to make realistic pymt offers to the major creditors and they have said they will do so and continue to pay the others smaller pymts! I just feel that what they have done i could have done myself. I be-grudge moving at present as the 1st 3 pymts went to them and that could have been ?2000 off some of our debt, as a matter of fact that would have clred a handful of smaller ones!!

I am going to see how they go on and may move over to someone else if nec but hopefully they have listened to my concerns and will act on them however I think the court claim form is to late to anything about as you only have so many days to act and if they send back to me etc...it wont get to the courts in time! Is that right?

Thank you all
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worried
Junior Member

12 Posts

Posted - 16 Feb 2011 :  12:53:45  Show Profile  Reply with Quote
If they make a reasonable off that the court accepted is a ccj still issued??
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Debt Management Advisor
Debt Management Expert



366 Posts

Posted - 16 Feb 2011 :  13:03:19  Show Profile  Reply with Quote
Hi worried.

I can see your concern about moving after this company has taken such an extraordinarily high upfront fee from you. Sadly however the modus operandi that they're charging for appears to have failed and encouraged legal action from a creditor rather than a willingness to settle the debt.

This modus operandi is not a "debt management plan" in the conventional way that one would normally be understood. Basically your money (or some of your money) is sitting in their bank account when it could be clearing your debt (and therefore discouraging legal action rather than encouraging it). Can I suggest that you ask them specifically how your money would be protected in the event of the insolvency of their company.

You can ask the Court for more time if you need it which hopefully will give you enough time to ensure that it is handled correctly. Legal representation is advised if at all possible.

I am a CertDR qualified Debt Advisor. I advise on all of the available UK debt solutions. For advice on all of your options please click here:
   
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Beverley Budsworth
Debt Management Expert



251 Posts

Posted - 16 Feb 2011 :  13:10:24  Show Profile  Reply with Quote
If your creditor has applied to the courts for a Court Order, you will be able to ask for an extention to respond.

You will either be asked to accept liability for the money owed, or put in a defence. A defence would usually be considered if you do not accept liabilty for owing the money, but as a loan taken out by yourself, it is not really an option.

In most cases you would need to pay the outstaning balance within the time limit to stop the CCJ being issued. Even if the courts wold accept a monthly amount offered the Court Order would still stand.

I am a Insolvency Practitioner and Managing Director of The Debt Advisor. To contact me about Debt Management Plans, IVA's or general debt advice please click here:
   
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worried
Junior Member

12 Posts

Posted - 16 Feb 2011 :  13:38:06  Show Profile  Reply with Quote
Is a Court Order the same as a CCJ? Our DMP Provider currently have our claim form which we have accepted liablity and signed.

We have in total approx 10/11 debts but our 2 biggest are RBS ?13000 & Blackhorse ?8000....we are paying ?737 per month goes towards our debt. What would you say is a reasonable offer to them 2 companies alone...Also how would i go about moving DMP as am loosing faith the more am reading. Is there someone you would recommend who dont do upfront fees to avoid getting into more debt???

You have all been so helpful!!!
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Phil Corfield
Debt Management Expert



897 Posts

Posted - 16 Feb 2011 :  13:58:31  Show Profile  Reply with Quote
Hello worried

Yes, a court order is a CCJ (County Court Judgment) in England & Wales.

The offers to your creditors in a standard DMP would be a pro rata amount - this means each creditor would receive a percentage of your payment based on the amount owed.
For example: You owe ?10,000.00 in total.
?5,000.00 is to one creditor (50% of the total).
Your payment out of your DMP to your creditors is ?200.00.
That one creditor would receive ?100.00 as its 50% of the total.

Regarding a firm to switch to without paying more upfront fees. DMA advised that my firm can do this for you; I can't say if Beverley's does or not. I can say there are other forms who offer this service too. Alternatively, you can speak to CCCS who do not charge any fees up front or monthly.

I am a CertDR qualified Debt Advisor and a Director of Bright Oak.
To contact me about a debt management plan or general debt advice please here:
   

Edited by - Phil Corfield on 16 Feb 2011 13:59:16
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Beverley Budsworth
Debt Management Expert



251 Posts

Posted - 16 Feb 2011 :  14:08:46  Show Profile  Reply with Quote
With the amount of debt you currently have, and the payments that is going towards your debt, the pro rata payments would be approximately ?225 to Black Horse and ?368 to RBS.

How does this compare to what your DM Company are proposing to offer?

I am a Insolvency Practitioner and Managing Director of The Debt Advisor. To contact me about Debt Management Plans, IVA's or general debt advice please click here:
   
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