DRO questions

Mra199 · 4 March 2017 at 2:20PM

Thank you!
It just seems too good to be true as I thought I'd be in debt and have to deal with the struggle for the rest of my life. All through living alone at 16 years old with no family and stupid decisions! At least I've made my mistakes young and yes 12 months will fly by its nothing compared to over 10yrs on a Dmp.

Thanks a lot for all your advice

Mra199 · 22 March 2017 at 1:51PM

Hello, I'm back and I really need your advice! So my DRO was granted on the 3rd of March and today I have rang Manchester city council to set up a new direct debit for the council tax due for the new year 17/18. The lady I spoke to told me I can only set up this payment including all of the amounts which were included in the DRO. She explained that they had received the information from the insolvency and that they had done an assessment on my debt. She informed me that as it's not reached the recovery stage yet (which it had) it wasn't to be included in the dro and that I would have to pay it all. I then rang stepchange for advise and they said I needed to ring the insolvency service, which I did. The person I spoke to at the insolvency service frankly told me it was not for them to discuss this matter and that I should ring my debt advisor.... and that all he could say was that those debts were included in my DRO, I am not to pay them and as of today's date they haven't received any reply from the council.

Now I don't know what to do. I just wanted to set up a direct debit for the new council tax so I don't fall behind on that and they won't allow me! And what happens if they do refuse for it to be included in the DRO does that mean the whole thing fails? Please help, I'm so worried and nobody can give me an answer

fatbelly · 22 March 2017 at 8:05PM

Mra199 wrote: »

Hello, I'm back and I really need your advice! So my DRO was granted on the 3rd of March and today I have rang Manchester city council to set up a new direct debit for the council tax due for the new year 17/18. The lady I spoke to told me I can only set up this payment including all of the amounts which were included in the DRO. She explained that they had received the information from the insolvency and that they had done an assessment on my debt. She informed me that as it's not reached the recovery stage yet (which it had) it wasn't to be included in the dro and that I would have to pay it all. I then rang stepchange for advise and they said I needed to ring the insolvency service, which I did. The person I spoke to at the insolvency service frankly told me it was not for them to discuss this matter and that I should ring my debt advisor.... and that all he could say was that those debts were included in my DRO, I am not to pay them and as of today's date they haven't received any reply from the council.

Now I don't know what to do. I just wanted to set up a direct debit for the new council tax so I don't fall behind on that and they won't allow me! And what happens if they do refuse for it to be included in the DRO does that mean the whole thing fails? Please help, I'm so worried and nobody can give me an answer

Your council sounds as stupid as mine.

Here is the extract from the insolvency Service's guide to Intermediaries:

Council Tax

Each local authority levies and collects a council tax which is payable in respect of residential property in its area. The occupiers of the property have joint and several liability for council tax.

At the beginning of the financial year, the local authority issues a ‘demand notice’ for the full balance due. This demand notice is an estimate of the tax due and is based on an assumption the tax payer will be resident in the property for the whole of the period, will remain a tax payer and that the property will remain in the same council tax band.

The demand notice will set out the payments the tax payer will be required to make over the course of the year on account of the council tax payable. This is usually 10 monthly instalment payments.

Any amount due and unpaid under the instalment agreement prior to the insolvency order is an unsecured debt in the proceedings. If the debtor’s council tax is up to date under the instalment agreement at the date of the debt relief order, no amount can be scheduled in the order as the unpaid balance relates to future occupation of the dwelling.

If instalment payments are in arrears and the debtor has defaulted in respect of a reminder notice or a final notice this will have resulted in the whole of the remaining liability for the year becoming due and payable. If so, the whole of the amount is due and payable and is a qualifying debt whether or not the council has obtained a liability order. If the debtor has maintained their instalment agreement in accordance with the demand notice, or no reminder notice has been issued only sums accrued and unpaid up to the date of the DRO are a ‘qualifying debt’.

Where a liability order has been obtained by the council, prior to the debt relief order being made the whole debt as notified within the liability order becomes due and it is therefore a qualifying debt.

In practice the council will send at a fairly early stage of the arrears process, a letter saying 'you have lost the right to pay in instalments' At that point the text in bold applies and the whole year's council tax can be included.

If you had a substantial amount of council tax still owing for 16/17 in March 2017, then it almost certainly would have reached that stage.

You should make your payments to the 17/18 tax, by standing order or manually if necessary and let them know that they are forbidden from allocating any of this to debts frozen under the DRO moratorium.

Incidentally, where my council acts stupid, I consider it my responsibility to remind them of the rules. I would have hoped the Stepchange Intermediary would do the same, though they probably work across several hundred local authorities and I only have the one.

Mra199 · 22 March 2017 at 9:44PM

Thanks so much, reading through that I do feel reassured. When I rang the council back, it was as though I was answering my questions for the advisor. In the end she told me that it would all be dealt with in the 'back office' and that she can't set up any payments for me but she would resend the letter to the insolvency stating the amounts aren't to be included in the DRO.

There are 2 amounts included in the DRO one which was for year 15/16 and those arrears went to court so definitely included. 2nd amount was for year 16/17 arrears only a small amount but step change said as it was arrears and not up to date it was to be included in the DRO. I think this is what the council are questioning.

I guess i will wait and see and in the meantime do as you advice with the payments for 17/18.

Thanks again for your help I really appreciate it!

fatbelly · 22 March 2017 at 10:34PM

Mra199 wrote: »

. 2nd amount was for year 16/17 arrears only a small amount but step change said as it was arrears and not up to date it was to be included in the DRO. I think this is what the council are questioning.

It is just possible that that is correct but if possible you should check the letters you got last year. If one of them says ''you have lost the right to pay in instalments' then it's a qualifying debt

Mra199 · 22 March 2017 at 11:21PM

Not one of the letters say that, even the one that is owed from 2015. each time it just states I also owe x amount from previous years...

fatbelly · 23 March 2017 at 6:56AM

This is the usual arrears process. The asterisk indicates where it becomes a qualifying debt:

If you miss an instalment, a reminder will be sent to you.

If you bring your payments up to date but a further instalment is missed, a second reminder will be sent.

If this is paid, but a third instalment is missed a final notice will be sent. You have now lost the right to pay by instalments and the whole year's bill is due*

The Revenue & Benefits section may consider making a special arrangement for repayment of arrears, and you should contact them immediately if you are unable to repay.

If you fail to make a payment after the issue of a reminder or final notice, or if you fail to maintain a payment arrangement, the council will request the Magistrates Court to issue a summons. At this stage court costs will be added to your account.

At the court hearing we will ask the Magistrate to award the council a Liability Order in favour of the council.

This Liability Order enables the council to potentially use one of the following options to collect the Council Tax:
•Attachment of benefits or earnings
•Charging orders
•Enforcement agents
•Bankruptcy and insolvency
•Committal to prison

Mra199 · 23 March 2017 at 8:31AM

Thank you!
The 1st amount has definitely been through that process however I have never received a reminder for the 2nd amount.

Mra199 · 5 April 2017 at 4:27PM

Hi

Just an update.
Mcr city council have now informed me they have reassessed my case and will be including the amounts in the DRO and have sent a new response to the FOR unit.. I even received an apology.

Again, thank you for your advice. Its helped!

ecthalion · 4 November 2017 at 5:54PM

Good afternoon. I'm hoping you can help me with my situation. I am due to apply for my DRO on 14th of November. I am behind with my council tax and by the 14th the full amount for the rest of the year will be due. Now I understand that this can be included in the DRO but as I wouldn't be paying council tax for the rest of the year this would free up £ 107 a month, would this mean my DRO would fail because I have more than £ 50 per month spare? I've put alot of time in this DRO and it was not an easy decision to make, I'm really worried that it will be refused on these grounds or that it will fail. I hope somebody can clear this up for me. Many thanks . S.

DRO questions

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free