It is not normally possible to include a CCJ in a debt management plan. You will usually have to pay the debt separately or use a different solution.

Included in this article:

• Why is it difficult to add a CCJ to a debt management plan?
• Can you pay a Judgment debt separately?
• Does a DMP protect you from getting a CCJ?
• Are there better debt solutions for dealing with a CCJ?

Want to start a DMP? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts

Why is it difficult to add a CCJ to a debt management plan?

If you already have a CCJ (County Court Judgment), you are legally obliged to pay it as ordered by the Court.

A debt management plan (DMP) is an informal payment agreement. It is not a legally binding on your creditors. It doesn’t have the power to overturn legal obligations like a CCJ.

As such, you can’t ignore the Judgment and reduce the payments by simply adding it to your DMP. If you do this, the creditor can (and probably will) start further enforcement action against you.

Such action could involve an application for an attachment of earnings so that payments are taken directly out of your wages or a Charging Order which secures the debt against your property.

Can you pay a Judgment debt separately?

Given you want use a debt management plan to resolve your other debts, it will be best if you leave out the CCJ.

In order for this to work, you will first need to make a separate payment arrangement direct with creditor who has got the Judgment. Once this is agreed, you can make provision for paying it within your living expenses budget. You then include the remaining creditors in your DMP.

This strategy should work as long as you can still afford to pay a reasonable amount into your debt management plan. Generally speaking, the minimum payment required by most debt management companies is £100/mth.

But what if you can’t afford to pay both the Judgment and a DMP?

You could apply to reduce the Judgment payment. This will require you to make a formal N245 application to the Court. However, it will cost money (£275 at the time of writing) and there is no guarantee of success.

Given this, a better option is normally to consider using an IVA or to go bankrupt. CCJ debt is automatically included in both these solutions.

Does a debt management plan protect you against getting a CCJ in the future?

One of the significant downsides of a debt management plan is that your creditors are still allowed to take further enforcement action against you. This is the case even after the Plan is agreed.

Although you may be maintaining your monthly payments, any of the creditors included can still decide to apply for a CCJ against you at any time.

Most banking creditors are unlikely to take this action as long as the payment they receive through your Plan is acceptable. However, this is not true for some business creditors and debt purchasers (companies who buy the debt you owe form the original lender).

If you are thinking about including business debt or debt acquired by a purchaser in your DMP, call us for advice. The legal protection offered by an IVA or bankruptcy might be better for you.

Are there better debt solutions for dealing with CCJ debt?

Where you have a CCJ, you should consider avoiding the debt management plan solution altogether. Before making any decisions, you also need to think about using an IVA and the option of going bankrupt.

Any CCJ debt you have can be included in both of these solutions. This means you don’t have to agree a separate payment plan with them and you avoid the affordability issues associated with having to pay both the Judgment and a DMP.

In addition, the creditors are legally prevented from taking more legal action against you.

If you are not a home owner, and will struggle to pay the debt you owe in a reasonable time, bankruptcy might actually be an ideal solution for you. Once bankrupt, you don’t have to make any further monthly payments if you can’t afford to. You would be debt free in 1 year.

Struggling with CCJ debts and need help? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential.