If you are thinking about starting a Debt Management Plan (DMP) you need to be clear about which debts you can include.
In this article:
- The debts included in a DMP
- Which debts cannot be included in the Plan?
- Can a CCJ be included?
- What if you own money to HMRC
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Which debts can be included in a Debt Management Plan?
Unsecured debts can be included in a Debt Management Plan (DMP). Can you include secured debts such as your Mortgage? Can you included debt owed to HMRC such as Tax and VAT? To find out more please visit: http://beatmydebt.com/debt-management-plan-frequently-asked-questions/which-debts-can-be-included-in-a-dmp
The Debts included in a Debt Management Plan
You can include most of your unsecured debt in a DMP. Unsecured debts include but are not limited to the following types of debts:
Credit Cards Personal Loans Catalogue Debts Store Cards Overdrafts
Payday loans Doorstep loans
– Outstanding balances after home or vehicle repossession
– Business loans for which you are personally responsible
In most circumstances gambling is funded with the use of a bank overdraft or credit cards. This is especially the case with on-line gambling.
Given this debt that you have built up as a result of gambling will often actually be owed to your bank or credit card companies. These types of debts are unsecured debts and can be included in a DMP.
BMD Tip: It is not sensible to start this type of solution to try and resolve debts that have built up as a result of gambling unless you have stopped gambling. If you have a problem with gambling you should seek help from your local Gamblers Anonymous or your GP who will put you in touch with a local gambling support group.
BMD Tip: There are some unsecured debts that cannot be easily included in a this type of debt solution. These include County Court Judgements (CCJs) and tax or VAT debts owed to HMRC.
Which Debts cannot be included in a Debt Management Plan?
You cannot included your Mortgage and other secured debts in DMP. If you use this type of debt solution you must continue to make full payments towards your mortgage and any other loan secured against your property. In addition you must also continue to pay car HP and lease agreements.
If you do not continue to pay your secured debts then the items that they are secured against will be at risk of repossession from the lender.
If a charging order has already been issued against your property this means that the associated debt has become secured.
Rent and Council Tax arrears
Generally speaking rent and Council Tax arrears cannot be included in a DMP as the landlord or Council will require the debt to be repaid sooner than would be possible through the plan. As such a provision to repay these debts will normally have to be made within your monthly living expenses before your disposable income is calculated.
Can a CCJ be included in a Debt Management Plan?
If you have already got a County Court Judgement (CCJ) against you it is difficult to include this debt in a DMP. The issue is that the Plan divides your disposable income on a pro rata basis between all of your creditors. However if a CCJ has already been issued you cannot simply ignore the amount you have been ordered to pay towards this debt each month.
If the amount you are able to pay towards it is less then what the Court has ordered you will have to apply to reduce the payment to fit within your Plan.
Given the Court agrees the debt can then be included. Where they do not you will probably have to leave this debt out and continue to pay the amount ordered.
The issue with this is that it will leave far less each month to share between your other creditors and might make it more difficult to agree payments with them.
Can HMRC Debts be included in a Debt Management Plan?
There are a number of reasons why you might owe money to HMRC. If you are a sole trader you might owe VAT or personal tax. Alternatively you might be employed but have other investments such as buy to let properties where personal tax is due. If this is the case then they will be is one of your creditors.
Tax debt is unsecured and does not have to be paid in preference to your other creditors. However you will not normally be able to include this debt in a DMP.
The main reason for this that it will normally take many years to repay your debts in full using this type of debt solution and HMRC will not be prepared to wait that long for their money.
Instead of including this type of debt in your Plan you will first need to agree a separate Time To Pay arrangement with HMRC which will get the outstanding tax paid within 12 months. Once this is in place you can then use what ever disposable income you have left to negotiate with your remaining creditors.
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