Debt Relief Order's & The Dept of Work and Pensions HELP

jamesb1239

Hi Guys,
Hopefully somebody can help as I know we have a few Debt Advisers on here and as you will probably remember you helped me when applying for my DRO.

My DRO was granted on the 14th May 2009, at this point I owed the Jobcente for a Crisis Loan that they had paid previously. I called them and informed them of the Debt Relief Order and they told me that all collection activities on the loan would stop.

I received a letter today from them to inform me that they were starting to take repayments again so I called them. They have just informed me that their guidance has been ammended now to cover Debt Relief Orders and it states that as long as I am in receiving a qualifying benefit from them they are able to continue to take repayments from me.

They supposedly cannot reduce the repayment to a token amount nor can they postpone it, when I applied for my DRO my surplus income was approximately £4 per month and they are now going to start taking £13.80 per week from me, this will push me back into the negative income yet again just when things were looking up.

I will be going to CAB on Wednesday morning (our CAB only accepts drop-ins on a Wednesday and there is no option to book in for an appointment) to see if there is anything that they can do to help, but I thought I would post on here in the meantime to see if DebtDoctor or the others had any advice.

Thanks in advance

antarctica

Hi I don't have any advice but I just wanted to say I hope you get it sorted soon, it really sucks

A
x

jamesb1239

Thank you for the kind words antarctica

debt_doctor

Hi,

The guidance to intermediaries from the insolvency service is that deductions should stop immediately from benefits re the DWP. The DWP seem to have decided to continue to make deductions as per BR legislation ( the high court Balding case).

The insolvency service are of the view that to continue deductions under a DRO is unlawful and are taking legal advice on the matter.

Your only course of action is to contact the DRO unit in Plymouth and ask them to instruct the DWP to stop collecting for the crisis loan.

This came to our attention about 2 weeks ago.

DD

jamesb1239

Thanks Debt Doctor, I have phoned the DRO Unit in Plymouth, they told me that I am not alone in this and that the DWP are using a different legislation and assuming that they are able to collect the debt. The only advice that they could offer is to seek legal advice, contact CAB and also write to my local MP.

I dont know where to go with this but I cant afford to pay it without falling back into the downward spiral of debt so i guess that i need to do something.

debt_doctor

The DWP are relying on this...........

http://www.dwp.gov.uk/docs/a15-2009.pdf

Chapters 23 - 26 inclusive. The insolvency service do not agree and are looking at legal action

DD

jamesb1239

Thanks for the update Debt Doctor, that made quite interesting reading, when I attend CAB this afternoon I may see if they are able to negotiate the repayment down due to my financial circumstances or even defer it as I notice that it states that once the DRO is discharged then the debt must be written off and they have to stop collection.

The Insolvency Service could stand up strong and make a point by giving everybody affected by the DWP's interpretation of the legislation early discharge, that would certainly solve the problem. Doubt it would happen though.

I just have to hope that the LA dont now decide to reclaim council tax debts from my Housing/Council tax benefits.

The person I spoke to in the recoveries section for the DWP said that he would post me out a copy of the guidance that they use, so if i do actually receive it then I will scan it and send you a copy as i notice that the one you linked to is for Local Authorities.

Thanks for all your help

jamesb1239

Just for completeness to the thread, here is the official guidance to which the DWP are working to with regards to Social Fund Loans;

Debt Relief Orders

279. Provision for Debt Relief Orders (DRO) was included along with that for bankruptcies and Individual Voluntary Arrangements (IVA) in the Insolvency Act 1996 but the DRO did not come into force until April 2009.

280. A DRO forms part of a package of measures designed to alleviate the damage to people's lives and expectations caused by unmanageable debt and are to be considered as a form of insolvency.

281. A DRO is designed primarily to help those on the lowest income and it usually lasts a year.

282. A customer may qualify for a DRO if they have less than £15,000 of total debt and have £50 or less income available each month to meet that debt and do not have assets of more than £300.

283. As in the case of bankruptcy or an IVA the Department can continue recovery action where, after the social fund loan is made, the customer becomes the subject of a DRO, provided that the customer remains in receipt of benefit. Recovery action can also continue where a social fund loan is made after the customer becomes the subject of a DRO.

284. Recovery by deduction from benefits can continue in all cases after the discharge of the Debt Relief Order.

285. If, at any time, including during the period that the DRO is in force, a customer comes off benefit then, as no benefits will be in payment from which deductions can be made, then all recovery action must be stopped.

preciousillusions

Sorry to bump this thread (hope you do not mind!) but James, i was just wondering if you got anywhere with stopping the DWP from taking deductions from your benefit or not? I am in the same position currently having entered into a DRO and needing all my benefit payments for living expenses and such, but am having payments reduced to pay back on a crisis loan. I just wondered if there was any way of getting them to be more leniant with this even if it just means reducing the payment rate or putting it back a few weeks. Please let me know if you can what happened in your situation in the long term, did you pay all of your crisis loan back? Thank you .

preciousillusions

*bump*

debt_doctor

Hi,
The guidance to intermediaries changed about 1 month after my earlier post in this thread in August.
There is currently nothing you can do to stop deductions during the 1 year moratorium period, but the amount deducted must not cause you 'hardship'.
You should apply to the DWP to have the amount reduced.

Citizens Advice specialist support unit (SSU) are looking for legally aidable clients who have been affected by this situation and intend to challenge the DWP in the high court through a judicial review to have these deductions overturned.
They are also meeting with ministers in January 2010 to get the ridiculous 'pension fund' rule overturned too.

DD