Debt Relief Orders (DRO) - Information & help thread

fatbelly

Gem82 wrote: »

What do people advise?

Thanks
Gemma

Hi

It is difficult in your situation as you need to be able to predict the future. At present a DRO looks to be a good option as it prevents any court action, and if your situation stays the same, it writes off the debts after 12 months, though your credit rating will be badly affected for 6 years.

But if you do get serious surplus income within the next 12 months then your DRO gets revoked, the debts come back and 13k is going to take some time to clear, as you say.

I note that you say that even before your (full time?) contract ended that your debts were increasing. So you would need to get a new job that paid significantly more than that one to turn negative balance into positive balance on your income/expenditure.

Maybe this isn't really a question for this thread as you are not asking about how DROs work - you are asking 'what's my best option?'

If you post a statement of affairs (probably a joint one if you are living together and hoping to get a mortgage sometime) on the main debt free wannabe board then folks there can help you to work though the options, only one of which will be the DRO.

If you are definitely going for a DRO, and want to clarify how they work then certainly come back to this board or this thread

Gem82

Thank you!
I don't earn a bad wage and I know I need to seriously look at my outgoings and make some serious cut backs somewhere. It is just a hard cycle to get out of.
Thanks
Gemma

The_mangler

Ive been on a DMP for a couple of years now, my payments are £34 a month which means a ridiculous amount of time to clear the debts of around £17000. StepChange recommended bankruptcy but Im finding it hard to find the £500 fee, my husband is disabled and I am his carer so no chance of ever improving our income. My question is can I have a DRO for £15000 of the debt and keep a DMP going for the extra £2000? I know having written it down it seems stupid but I need to clear these debts Im going nowhere fast.

fatbelly

The_mangler wrote: »

Ive been on a DMP for a couple of years now, my payments are £34 a month which means a ridiculous amount of time to clear the debts of around £17000. StepChange recommended bankruptcy but Im finding it hard to find the £500 fee, my husband is disabled and I am his carer so no chance of ever improving our income. My question is can I have a DRO for £15000 of the debt and keep a DMP going for the extra £2000? I know having written it down it seems stupid but I need to clear these debts Im going nowhere fast.

The answer to your question is no. Stepchange would have recommended a DRO if you had qualified.

From what you have posted it sounds like bankruptcy is correct advice. The fee is £525 plus £175 for the court fee unless you can get remission. I can see that it would take some time to save that sum, and it does not look like the 15k limit is going to be raised anytime soon.

Is all the 17k in your name? Any ppi to be reclaimed? Any water/electricity debt that might be attacked with charitable help? Any statute barred debt? Any pre-2007 catalogues that might be unenforceable due to no signed agreement (I'm clutching at straws here).

Will check in again later.

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wba31

fatbelly wrote: »

Is all the 17k in your name? Any ppi to be reclaimed? Any water/electricity debt that might be attacked with charitable help? Any statute barred debt? Any pre-2007 catalogues that might be unenforceable due to no signed agreement (I'm clutching at straws here).

Will check in again later.

fb

I was under the impression that statute barred debts are still included in DRO's and count toward the £15k limit?

fatbelly

wba31 wrote: »

I was under the impression that statute barred debts are still included in DRO's and count toward the £15k limit?

They can be omitted but you really need evidence from the creditor or the court of their status. It's safer to include them. AI guidance:

Statute Barred Debts and Other Unenforceable Debts

This issue of statue barred debts is not at all straight forward and limitation on debt is a complex area of law, however advice has been obtained regarding whether statute barred debts need to be scheduled in a DRO application.

Section 251B of the Insolvency Act 1986 states the following:
251B Making of application
(2) The application must include—
(a) a list of the debts to which the debtor is subject at the date of the application, specifying the amount of each debt (including any interest, penalty or other sum that has become payable in relation to that debt on or before that date) and the creditor to whom it is owed;

However, Section 251A (2) (a) of the IA 1986 states that a qualifying debt means a debt that is for a liquidated sum payable immediately or at some certain future time.

If a debt is indeed statute barred then it is neither “payable immediately or at some certain future time”.

Firstly to clarify, limitation periods on debts do differ: all contract claims are barred after six years but claims under deed (i.e. mortgage shortfall debts) are barred after 12 years. To add to the difficulty if a debt is acknowledged then time starts to run again.

Limitation, effectively, does not apply against a debt upon which judgment has been obtained. If the creditor has previously taken a debtor to court and obtained a judgment, the debtor will be unable to use the Limitations Act 1980 to dispute the debt. If the judgment is over 6 years old the creditor may need the permission of the Court to enforce the debt.

It is also correct that a ‘debt’ exists beyond the limitation period but the creditor can lose any right to enforce the debt by virtue of limitation.

Due to the uncertainty of limitation, the first principle must be that all unpaid debts should be listed in the application for a DRO; this is so even if the debtor considers that they may be able to rely upon a defence of limitation against enforcement of that debt. Where, prior to the DRO application being submitted, the Intermediary has established that limitation applies and the debtor has evidence that the debt is statute-barred, then the debtor can choose not to list it The Intermediary should be satisfied that the debt is statute barred and keep any evidence on the debtor’s file.

Debts that can be shown to be unenforceable for another reason, for example, a pre-April 2007 Consumer Credit Act regulated agreement that does not comply with the requirements on prescribed terms, can be treated in the same way. Where the court would have discretion whether or not to enforce a debt, it should not be regarded as unenforceable, e.g. a post-April 2007 CCA regulated agreement that does not comply with the requirements on prescribed terms.

If a debtor knows that they have a statute barred debt but has no information about it and it does not appear on any credit reference reports, an application can proceed without including the debt.

In any scenario where statute barred debts are not scheduled in a DRO application a note should be included in the application explaining that there are statute barred debts detailing the sum if known or explaining the quantum is unknown, or an email sent to the DRO Unit explaining this before the application is submitted.

In summary, debts barred by limitation or otherwise unenforceable do not need to be included as qualifying debts for the purposes of a DRO and if they are not listed will not count towards the £15,000 debt limit.

Where the official receiver subsequently discovers that a debt was not statute-barred/unenforceable and as a consequence, at the date of the DRO application the debts exceeded £15,000 the DRO will be revoked.

As limitation and enforceability can be such an uncertain area the general rule should be: if in doubt, list it.

longtermplanner

The_mangler wrote: »

Im finding it hard to find the £500 fee, my husband is disabled and I am his carer so no chance of ever improving our income.

Go to your local Citizens Advice Bureau and ask them to help you with an application to British Gas (or EDF or Thames Water or many other utility cos) to get help with the bankruptcy fees. See http://www.britishgasenergytrust.org.uk/ You are much more likely to get the help if a charity such as CAB helps you as they will need to supply an Income & Expenditure statement for you.

debt_doctor

wba31 wrote: »

I was under the impression that statute barred debts are still included in DRO's and count toward the £15k limit?

I had this issue a few months back where a client had £18k of total debt with £5k believed to be stat barred.


I spoke to the DRO unit and they started off by saying "you would need to prove this, need to prove that" - I asked, how do you prove that you HAVEN'T done something? ie not paid or not written to someone?
I also informed him that it was highly unlikely that a creditor would confirm in writing that a debt was stat barred.


He went away to talk to supervisor and they came back with " the debtor will need to satisfy themselves that they believe the debt to be statute barred, and if they believe this is the case, those debts can be omitted.
A further comment was that if it later came to light that any particular debt was not statute barred, then if the overall debt then became more than £15k, the DRO could be revoked, even if the DRO had already ended.


I sent a letter for client to sign stating his thoughts that these debts were statute barred, he signed and I submitted application which was approved.


DD

fatbelly

longtermplanner wrote: »

Go to your local Citizens Advice Bureau and ask them to help you with an application to British Gas (or EDF or Thames Water or many other utility cos) to get help with the bankruptcy fees. See http://www.britishgasenergytrust.org.uk/ You are much more likely to get the help if a charity such as CAB helps you as they will need to supply an Income & Expenditure statement for you.

Mangler - this is what I had in mind for reducing debts to (if you have them) British Gas or EDF. NPower are in the same scheme. Most water authorities have schemes too.

I have had help from these in reducing/writing off debt but personally I have never managed to get help for anyone in regards to bankruptcy fees from these trusts but ... if you don't ask you don't get.

Best of luck.

cwmparc

Can somebody help me with a question please. My DRO has been accepted, but one of the debts may have been statute barred as I have not had any correspondence from the company in nearly 7 years.

If I contact the company using the template letter regarding statute barred debts, and if it was a barred debt, would this be taken off the DRO.

Thanks for your help.