Should I help my brother avoid a DRO?

Miaowycat

Hi Everyone,

Would be hugely grateful if there is anybody out there who could give me some advice! My brother has credit card debts of about £12k. His credit rating is lousy so balance transfers/loans are out of the question, so he's now considering a Debt Relief Order (he seems to fulfil all the criteria).

I've probably got just enough in my savings to lend him to wipe out his debts, but it would leave me short, and the idea of all of his debts just being wiped out is very attractive! So my questions are:

1. What is the negative impact of having a DRO? I know it lasts for 6 years and I guess in this time he won't be able to get any loans or credit but this is probably not a bad thing knowing my brother . Would it be likely to affect him renting somewhere? (he needs to move soon).

2. If he rang up the credit cards, are they likely to accept an amount smaller than the outstanding balance, and does anyone know by how much? For example, if he owes £5000 and he offered them £3500 to settle up, would they take that (rather that have it all wiped by a DRO?). Even better, could he get away with offering them even less (given that he's been paying 25% interest for the past 10 years or so).

Thank you so much for any advice you're able to give!

Saturnalia

Personally I wouldn't do it. Lending between families can cause so much upset I don't think it is worth the grief.

Bottom line, your brother can't pay his creditors, how will he pay you? As well, how did he get that much debt on cards - does he have anything to show for it or did he fritter the money away? If so, can you be certain that if you bail him out that he won't rack up the debts again? If he gets a DRO then he won't have any more credit for years so gives him the chance to re-train his own spending habits, if you pay off his cards he won't get that.

You know your brother and the relationship you have so you are best placed to decide, but just look round these boards to see the stories of how friends & family lending can go badly wrong.

fatbelly

I agree with this - the only thing that made me pause slightly is that he will be moving soon. So I was going to suggest that he think about the timing of his DRO.

But then I noticed that you said he had a lousy credit rating. So any landlord that did a credit check would not be impressed as things stand.

From what you've posted it sounds like a DRO is a good option for him.

If you want to read more about them:

Factsheet Debt relief orders

Official Guide

P.S. A DRO lasts for one year - debts discharged after a 12 month morotorium. It does stay on your credit file for 6 years and you can't have another one for six years.