Debt Relief Orders (DRO) - Information & help thread

wba31

fatbelly wrote: »

OK - I've got a bit more time now...

She has not made a preferential payment or sold anything for less than it was worth. So she can answer 'no' to those two questions on the application. Would the DRO Unit find out about this? Well, they might because the mortgage might show on the credit check as having been redeemed last year. And if the intermediary knows about it they are required to flag this up.

On the positive side the £3500 would not have cleared her debts. The problem (if there is one) is in where the £3500 went, and whether by investing in your property she has acquired a beneficial interest in it and thus exceeds the asset limit. It's a bloody difficult subject at the best of times.

Any intermediary will be understandably cautious - better to say 'it might be a problem' even if there is a small chance of the application being declined or revoked.

I think technically if the application is declined, you can re-apply as soon as the 'issue' is sorted but if revoked you do have to wait 6 years before another one.

But I thought the choice was between DRO and bankruptcy. My tentative suggestion was to try the DRO knowing that if that doesn't work you still have bankruptcy as the next option, but have lost £90.

Here is what the DRO Unit say about your situation:

Previously Owned Properties

Where a client informs their intermediary that they have previously owned a property that has been sold within the last two years, it would be good practice to ask the client to provide a copy of the completion statement. This would assist the Official Receiver in the event that there are any problems in the application process.

If Mrs has taken £3500 out of her house and put that down as deposit for house in Mr's name, that means she has beneficial interest in the property (by way of the £3500?)

If Mr can buy out her equity, and subsequently Mrs takes out her £90 fee, pays pro rata, leaves herself with less than £1000 DRO is then a viable solution.

I think if Mrs was to say "i dont have any assets" because she has given this £3500 to her husband, I definitely think she would have to say yes to the question to giving away/selling an asset for less than it was worth. The questions to ask in the guidance notes could well be for cash lump sums.

dragonfly2008

Im currently on a DMP. My circumstances are very difficult and a DRO would be better in the short term. In the longer term, the DMP will probably be paid off in maybe 3 or 4 years. I am thinking that whilst the DMP is on my credit report, ill always struggle to get credit or a mortgage anyway. So why not go with a DRO and be done in 6 years instead of 9, and accept I wont be getting anything credit based for 6 years. I know its probably not particularly ethical, but in my position thats the harsh reality. What are your thoughts on persisting with a DMP versus a DRO in my case ?.

I have a small overdraft of £100. Am I best opening a new bank account prior to applying for a DRO ?. Is there any reason why id want to pay the overdraft off, besides staying with the same bank, or is it a simple no, open a new bank account, include the overdraft in the DRO.

My circumstances will change, my income will increase, my outgoings will increase, but i will remain within the £50 a month rule. Will I need to report this change in circumstances, and does anybody have any experience with doing so ?. Do they bicker with you over outgoings and do everything they can to get you off a DRO, or is it pretty straight forward ?. Do you need to provide proof of any or all outgoings and income, new bank statements, new application, or anything. What is the process ?. Or am i better waiting until my circumstances change then apply.

fatbelly

dragonfly2008 wrote: »

Im currently on a DMP. My circumstances are very difficult and a DRO would be better in the short term. In the longer term, the DMP will probably be paid off in maybe 3 or 4 years. I am thinking that whilst the DMP is on my credit report, ill always struggle to get credit or a mortgage anyway. So why not go with a DRO and be done in 6 years instead of 9, and accept I wont be getting anything credit based for 6 years. I know its probably not particularly ethical, but in my position thats the harsh reality. What are your thoughts on persisting with a DMP versus a DRO in my case ?.

I have a small overdraft of £100. Am I best opening a new bank account prior to applying for a DRO ?. Is there any reason why id want to pay the overdraft off, besides staying with the same bank, or is it a simple no, open a new bank account, include the overdraft in the DRO.

My circumstances will change, my income will increase, my outgoings will increase, but i will remain within the £50 a month rule. Will I need to report this change in circumstances, and does anybody have any experience with doing so ?. Do they bicker with you over outgoings and do everything they can to get you off a DRO, or is it pretty straight forward ?. Do you need to provide proof of any or all outgoings and income, new bank statements, new application, or anything. What is the process ?. Or am i better waiting until my circumstances change then apply.

It's really hard to say what is best on the information given so you may want to run your situation past someone independent, like National Debtline.

dragonfly2008

fatbelly wrote: »

It's really hard to say what is best on the information given so you may want to run your situation past someone independent, like National Debtline.

Spoke to them and in pragmatic fashion said; include the overdraft on the DRO, open a new bank, if im still eligible when my circumstances change there will be no issues.

I have a strange feeling of dread about a DRO. Changing bank, still curious about how real people have got on with reporting a change in circumstances, how it could affect my employment further down the line because the comments on management positions are very vague, not being able to get a mortgage for 6 years, not being able to get car finance for 6 years. Probably wouldnt want a mortgage for another 4 years, so whats another 2, and id probably not even finance a car its the fact i wont be able to if i need to as daft as it sounds. And of course the niggling question of, am i better sticking with a DMP or going with a DRO. Short term the answer is DRO, but longer term, im not sure. And what is worse, nobody can really give definitive answers, and it will end with myself plumping for one route or another because its very individual and circumstances vary i suppose. I am probably going to sacrifice a year and become a teacher, or go into general management either by graduate scheme or prior experience. Its unnerving that the management side could all be knocked on the head if i go with a DRO. Because what would i do, besides go into teaching, thats what ive always done or i'm geared towards, sport/leisure/management. If i did stick with the DMP, and endured a few difficult years, what would i truly gain, still find it difficult to get a mortgage ?... its not really a draw, besides knowing it wont be affecting my employment. I guess i'll just have to have a good think, make my bed and lie in it so to speak.

fatbelly

dragonfly2008 wrote: »

Spoke to them and in pragmatic fashion said; include the overdraft on the DRO, open a new bank, if im still eligible when my circumstances change there will be no issues. .

Yes, that sums up standard advice

My concern was that your debts might be a bit low to head into a DRO, if your surplus is <£50 and your dmp completes in 3 years.

As regards your credit file, the defaults already there drop off 6 years after they were entered, whereas the DRO would create a fresh entry that would stay for 6 years.

dragonfly2008

fatbelly wrote: »

Yes, that sums up standard advice

My concern was that your debts might be a bit low to head into a DRO, if your surplus is <£50 and your dmp completes in 3 years.

As regards your credit file, the defaults already there drop off 6 years after they were entered, whereas the DRO would create a fresh entry that would stay for 6 years.

At the current rate, it will take me 8-10 years to pay off. I am in a difficult position at the moment, but 3 or 4 years from now my circumstances will improve one way or another, and when they do I should be able to pay it off quickly, so thats where the 3 years came from. I was speculating and hypothetically thinking if I persist with the DMP paying what I can, then pay it off in 3 or 4 years via increased payment/lump sums, will it affect me negatively for a longer period of time, than a DRO would.
In short, if I pay a DMP off in 3 or 4 years, is it going to still be on my credit report for another 6 years after that date ?, if the answer is yes a DRO will be off my credit report sooner it appears, and if the answer is yes, i might as well make no effort to pay it off early, and wait for the 6 years to be up.

Essentially the process i’ll go through is

- My circumstances will change in the next 12 months, but I am very likely to remain eligible for a DRO. That is why I was asking about the process and peoples experiences of reporting a change in circumstances.

- My circumstances will change again in 3 or 4 years, but this time I will be far better off financially. The DRO would be over by this point, but remain on my credit report, and I am wondering how it would affect 1) My career 2) Getting a mortgage, in comparison to a DMP.

1) If a DRO will not affect my career thats another reason to go for a DRO rather than slog it out with a DMP. So how do I definitely find out if it will or not before i reach the point of applying and getting turned away, what is going to hold me back, what jobs will I not be able to do, what criteria will a job require that I will fail to meet because of the DRO, so on and so forth.

2) If a DMP is going to severely affect my chances of getting a mortgage despite paying it off and until its off my credit report, a DRO may hinder me for a shorter or equal length of time, and that is another reason to not slog it out with the DMP. If I pay the DMP off in 3 or so years, and I will be able to get a competitive mortgage straight after that point, maybe I need to consider this because ill be able to get a mortgage 2 or 3 years earlier than the DRO. Maybe waiting another 2 or 3 years for the DRO to drop off the credit report is not a big deal. But its the fact, I dont feel able to make this decision because I dont know to what extent a DMP will prevent or hinder me getting a mortgage. I’ve read people saying as long as its on your credit report, i’ve read others saying 3 years after youve paid it off…. Well if thats the case the DRO will drop off my credit report at that point anyway.

I know this is pretty lengthy, I tried to keep it as brief as I could, and I know changing circumstances adds to its complexity. But I have concerns or curiosities, and its not helping my decision making without knowing the answers.

Pickles112

Hiya
After your DRO application has been submitted how long does it normally take to find out if it's been accepted or not?
Thanks

fatbelly

Pickles112 wrote: »

Hiya
After your DRO application has been submitted how long does it normally take to find out if it's been accepted or not?
Thanks

Your intermediary gets an email normally the following working day.

You get a letter and appear on the register the day after that.

Don't worry if things slip a day or two.

Pickles112

Okay thank you! I'm so nervous about it! Fingers crossed! Thanks for all your help!

Pickles112

Hi again
DRO unit have replied and said it's been declined due to the debt for mortgage protection on my credit report. I've never had a mortgage and the amount is the debt I have with a credit card. They have asked for more information on my mortgage and if I sold it etc.. how can I get that changed on my credit report?