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17/09/2021

Can a Debt Management Plan stop bailiffs?

17/09/2021

Can a Debt Management Plan stop bailiffs?

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For someone struggling with debt problems, dealing with bailiffs is a constant threat. Nobody likes the idea of debt collectors coming to coming to their homes and chasing them for payment, but how do you stop them?

In this guide we’ll explore the threat of bailiffs, what powers they have, and how a debt solution like a Debt Management Plan (DMP) might be able to protect you from enforcement action.

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What are bailiffs?

Bailiffs, also known as enforcement agents, are debt professionals with legal powers to collect debt. They might work on their own, for a private company, or as employees of your county court or local council.

Depending on who they work for, bailiffs have the power to collect a range of debts, including:

  • A County Court Judgment (CCJ)
  • Council tax arrears
  • Court fines
  • Other debts

In the vast majority of cases bailiffs powers don’t kick in until you have been taken to court by your creditors.

Once legal action has been taken against you, either in the form of a magistrates court, high court, or county court judgment, you will be expected to work out a payment plan to the creditor involved in the judgment. If you fail to do so, a bailiff may get involved.

What powers of collection do bailiffs have if I owe money?

There are various tactics bailiffs can employ in order to force you to repay the money you owe, but first they need to send you a letter notifying you that they’re coming. This is known as a notice of enforcement.

You will be sent the notice at least 7 days before a bailiff visit, giving you time to prepare for the visit pay your debt in full, or arrange a payment plan with your creditors.

If you choose not to act, bailiffs can come to your home. They are not allowed to force entry and can only enter with your permission, but if you let them in they have the power to seize certain goods and assets to auction off in order to recover some of the money you owe your creditors.

Can a Debt Management Plan (DMP) help protect me against bailiffs?

A Debt Management Plan (DMP) is a debt solution created for people who owe a significant amount of money to creditors that they can’t afford to pay right away.

Rather than paying every penny you owe up front, a DMP allows you to repay your debts over a certain period of time by making payments each month, often at a reduced rate.

While entering a Debt Management Plan isn’t guaranteed to stop bailiffs coming to your door, being able to tell enforcement agents that you have already worked out an agreement to repay your creditors could help you protect your assets.

Are Debt Management Plans legally binding?

Debt Management Plans are what’s known as an informal agreement. They can be set up by yourself or a third party representative and you don’t need the help of an Insolvency Practitioner (a debt professional licensed by the Insolvency Practitioners Association) to manage them.

Because a Debt Management Plan isn’t legally binding, your creditors aren’t legally obliged to accept reduced payments towards the money owed, or freeze interest and charges on your debts. They can also technically still take court action against you during your DMP.

That said, entering into even an informal repayment plan can often give your creditors the reassurance they need that you are serious about repaying what you owe, which can lead them to accept more favourable payment terms.

So how do debt management plans help keep bailiffs away?

If your creditors are considering taking enforcement action against you to recover court fines or other debts, there a number of ways that a Debt Management Plan can protect you.

Creating a repayment plan for your unsecured debts

The first and most obvious way a DMP can protect you is by placing you on a debt repayment plan that you have agreed with your creditors.

Bailiffs are usually sent in by lenders as a last resort, when they think they have no other way of recovering funds held. By setting up a repayment plan with your creditors’ consent, you’re committing repaying what you owe, and therefore there’s no reason for creditors to consider enforcement action.

Possibility of reduced payments

When setting up a Debt Management Plan with your creditors, you set out a plan to pay back what you owe over time and – while there’s no guarantee – creditors are often happy to accept a plan that amounts to less than your total debt.

As well as offering a reduced monthly DMP payment, creditors may also agree to freeze interest and charges on your debts. These terms make it less likely that you will miss payments towards your DMP, which in turn make it less likely your creditors will feel forced to turn to legal action.

Having a third party deal with creditors on your behalf

While it’s possible to set up a Debt Management Plan yourself, many people opt for a DMP provider – an organisation that specialises in setting up and managing Debt Management Plans.

One of the benefits of using a DMP provider is that they take it upon themselves to deal with creditors on the customer’s behalf. That means you will have professionals representing you in discussions with your creditors, reassuring them you are on track, and working to keep the bailiffs at bay.

Are bailiffs the same as debt collectors?

People often get confused between bailiffs and debt collectors, and it’s easy to see why. Both are responsible for collecting debts and may pay a visit to your home, but beyond that, they’re actually rather different.

Bailiffs usually work on behalf of a public body, like the court or a local council, and have the legitimate legal authority to visit your home and recover certain possessions if you don’t pay your debts.

Debt collectors, on the other hand, operate privately, usually for a debt collection agency. They often buy debts from other parties and collect it for themselves.

Unlike bailiffs, debt collectors don’t have any special powers to collect debts. They may phone your home or pay you a visit and ask you to pay, but you aren’t obliged to agree. Instead, it’s best to deal with the creditor directly.

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What do I do if I feel a bailiff or debt collector has acted unfairly?

Whether you’re visited by a bailiff or a debt collector, you don’t have to accept poor treatment. If you feel an enforcement agent has acted unfairly or outside the law, there’s a complaints procedure in place that you can follow.

A good place to start is the Financial Ombudsman Service, a free service that exists to settle complaints between individuals and businesses or public bodies. You can find out more about how to lodge a complaint here, on their website.

Where can I get advice on a debt solution to protect me against bailiffs?

It’s never nice to face the threat of enforcement action, especially if you want to deal with your debts but aren’t sure how.

That’s where we can help. As a leading debt management company, Creditfix has decades of experience in dealing with creditors and helping our clients keep bailiffs from the door. Unlike a lot of debt advice providers, our initial guidance is absolutely free.

If you’re struggling with debt and are researching debt solutions like DMPs, or you just want advice on your financial situation, then get in touch today. You can call a debt advisor for free on 0800 0431 431.