Can I stop a charging order with a debt management plan?

If a charging order is issued against you, the associated debt will be secured against your home. This can be prevented if the right steps are taken to manage your debt problem.

If you are a home owner and you have been issued with a county court judgement (CCJ) which you do not pay, the creditor can apply for a charging order. Once this is issued, the unpaid debt will be secured against your home.

The receipt of a charging order does not mean that your creditor can force you to sell your house. This would only happen if the court issues an order of sale which is very rare.

However, the equity in your property is reduced by the value of the debt.

Once a charging order is in place, the debt is secured. It can therefore no longer be included in a debt solution such as a debt management plan. Nevertheless, debt management can be used to prevent a charging order happening in the first place.

How can a debt management plan help?

If you are struggling to repay the debt you owe, a debt management plan (DMP) will reduce the payments you make to your creditors each month to an amount you can afford.

Once a DMP is agreed and you are making the agreed payments, it is currently unusual for any creditor to apply for a county court judgement against you. However, this policy may be starting to change.

Some creditors are implementing the new policy of applying for a CCJ even where a debt management plan is in place. This then gives them the option of applying for a charging order if the payments you have agreed are not met.

For this reason, you must make sure you keep up your DMP payments and if you receive CCJ admission forms, you must complete these properly and in accordance to the information given in your debt management plan.

Further measures to protect your home - an IVA

If you implement an individual voluntary arrangement (IVA) this will give you legal protection against your creditors. Once the IVA is accepted, your creditors can no longer take further actions against you to collect their debt.

For this reason, once an IVA is implemented you can be sure that you are protected from the possibility of a charging order.

However, as a home owner, undertaking an IVA will mean that you agree to release equity from your property for the benefit of your creditors if this is available.

Unfortunately, if you already have a charging order, there is very little you can do to overturn this. You should however take action to ensure that you protect your home from charging orders before they happen.

A debt management plan can be used to prevent the issue of a charging order. But once in place, you must ensure that you maintain agreed payments and respond to any subsequent county court applications properly.

If you are looking for legal protection from charging orders, you should consider an IVA. However, this solution may have other implications for your property which you need to be fully aware of.

If you are struggling with debt, visit www.BeatMyDebt.com

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