Debt Relief Orders (DRO) - Information & help thread

fatbelly

blotter12 wrote: »

Thanks for reply fatbelly
I am 64 years old myself and have never missed a payment, not worried about a future credit history. If the inheritance were to come through after the moratorium are the rules the same as bankruptcy ie the debts would still need to be paid ?
Also if the interest on the debts are frozen during the moratorium, and then I am able to pay the debts through the inheritance coming through is all the missed interest added on from the start of the DRO

OK, two questions there.

DRO and bankruptcy are both forms of insolvency but there is a fundamental difference in that in bankruptcy all assets are said to 'vest with the trustee.' So if you come into a lump sum the trustee takes it, pays the debts in full, pays his own fees (which can be substantial) and returns anything left over. In a DRO there is an assumption of no (or minimal) assets. So if you come into a lump sum during the moratorium the DRO is revoked and the debts come back. You're effectively on your own again.

If you come into a lump sum after the moratorium, and the DRO Team learn about it, they will investigate to see if this counted as an asset during the moratorium. A small number of DROs are revoked retrospectively because of this sort of thing.

Interest on debts does not have to be frozen during the DRO moratorium - it's just that the debt is written off if the moratorium completes. If it fails mid-year then the protection of the DRO is removed (usually with a 3-month notice period) and you are free to reach whatever arrangement you can with your creditors.

smallandcute

Hi,



I am sorting through my creditors letters and some havent contacted me in a good while. Payplan said that they will need evidence of debts so whilst i am waiting for the claim pack it is worth me writing to them to confirm the debt is still live, what the interest is etc so that i have the evidence or should i just hand over what i have?

fatbelly

smallandcute wrote: »

Hi,



I am sorting through my creditors letters and some havent contacted me in a good while. Payplan said that they will need evidence of debts so whilst i am waiting for the claim pack it is worth me writing to them to confirm the debt is still live, what the interest is etc so that i have the evidence or should i just hand over what i have?

Only just seen this - hand over what you have.

If payplan need you to make further enquiries they'll let you know.

Leaeas84

I’ve been advised by StepChange that a DRO would be best. Have a 6k debt and no longer working. We have ROa car but it is my husbands (he paid for and it’s registered to him even though I use it most).

What are the downsides of a DRO? I’m not fussed about credit rating as it’s already rubbish.

I just panic about getting car insurance or renting another house if our landlord sells our house.

Any help would be appreciated as the debt is now making me loose sleep..

fatbelly

Leaeas84 wrote: »

I’ve been advised by StepChange that a DRO would be best. Have a 6k debt and no longer working. We have ROa car but it is my husbands (he paid for and it’s registered to him even though I use it most).

What are the downsides of a DRO? I’m not fussed about credit rating as it’s already rubbish.

I just panic about getting car insurance or renting another house if our landlord sells our house.

Any help would be appreciated as the debt is now making me loose sleep..

I'm an intermediary for DROs with Citizens Advice and I do a lot of these things. They work really well for those that qualify and I'm going to have to dig into my memory for any downsides as most people do not have any.

1. It is possible your bank account may be affected. You should already not be banking where you have debts but I am aware that Nat West trawl the register and downgrade people to a basic account even if they do not have a debt to Nat West.

2. It's a public register so it is possible that someone may find out that you do not want to know.

3. If you get an unexpected lump sum (inheritance, ppi refund not asked for) or a substantial increase in income you may lose the DRO even though that may not be enough to pay the debts.

4. Once you have had one, you cannot have another one for six years. So if you get into worse trouble you may regret the original decision.

5. There may be some careers that would be affected by your insolvency.

6. If you're a company director, you're expected to step down and get your entry removed from companies house before the DRO.

7. Unlike bankruptcy, only the debts you include are covered, so it's important to do your research thoroughly.

As I said, most people see no downside to it, compared to the positives.

Leaeas84

Thank you.

My situation won’t change in the next year.

I think I will try and sort it out.. better than losing sleep over the debt. Annoyingly they are old debts from when I left a job and didn’t have another lined up so I ran up debts just living. Plus I had no idea about money! Much more sensible now.. mostly thanks to my hubby!

SammyJx

What's this?

SAMMYJXView public profileSend private messageFind more postsView all thanked posts

DRO and brighthouse

Good morning,

We ad a successful dro which has been active since 20th July 2018.!
Brighthouse was excluded from this as we have a tv with them and this was deemed a necessity. Our washing machine has just broke and we are in dire need of a new one as with 2 young kids I do washing literally everyday. There is a washing machine on brighthouse which over the repayment time is less then £500. Can I take this out without it affecting dro or not?

fatbelly

I see you've posted this in 3 places so let's see what answers you get.

Firstly, Brighthouse may not want to give you further HP.

But if they do, and the credit is for less than £500, then the DRO Team would have no problem with it.

On the practical side, are you sure you can afford such an expensive way of acquiring a new washing machine? A Beko 6kg machine will cost you £468 over 3 years through Brighthouse. They retail for £179 at Currys.

SammyJx

Thank you for your reply.
Unfortunately, we either do it through brighthouse or not have one at all.
We've ended up with a dro because we are sooo very short of money and we have no savings at all. It would take us about 11 months to save up for a new one at 189 ourselves. And unfortunately two children under 3 warrants alot of washing for us to be driving 15 miles to one of our parents and back again every few days to keep up with our washing loaf.

fatbelly

SammyJx wrote: »

Thank you for your reply.
Unfortunately, we either do it through brighthouse or not have one at all.
We've ended up with a dro because we are sooo very short of money and we have no savings at all. It would take us about 11 months to save up for a new one at 189 ourselves. And unfortunately two children under 3 warrants alot of washing for us to be driving 15 miles to one of our parents and back again every few days to keep up with our washing loaf.

Yes I knew you would say that. But that is the way of thinking that leads people to have high debts, no (or not many) assets and becoming over-committed on regular expenditure. DRO candidates in other words.

I cover a number of towns in my work as a debt adviser and only one has a Brighthouse. In that location my clients always have at least one, often four or five, HP agreements through them (I remember a £1000 vacuum cleaner). It's not difficult to untangle them. In fact Brighthouse are quite helpful. But my point is in the other towns people have to think differently so they are more likely to repair or buy secondhand locally