Advice on DRO and DMP

MissDixie

Hello

I am new to the forum and just after some advice and a second opinion. Firstly let me explain my position I am a 'mature' student in my first year of study for my degree, (previously did a foundation year) I currently have debts totalling £4,573, from 3 separate credit cards, one store cord and one personal loan, this also includes my student overdraft which is interest free at the minute.

As I am a student I do not get paid much I receive a student loan and bursary, I receive a total of 6253 annually, some of this is paid monthly while the rest is paid per term.

After doing my income and expenditure I am left with around £34 a month. Now this is not enough to pay each of my creditors the minimum payment, before I was relying on my overdraft in the hope of getting a part time job but I haven't got any of the jobs I have been applying for so far and my course is pretty full on study wise.

I have recently spoke to step-change debt charity (CCCS) about my situation and I was advised that my best option was a debt relief order. I have been looking at this order online and I am a little worried/scared about what it entails. With reference to my future and being able to get a mortgage etc. when I finish university, I am only still quite young and was wondering how this order would affect me?

Has anyone had this debt relief order, is there any advice you can give me?

I was also told that if I did a debt management plan and was to only pay £5 per month to each creditor, which takes me over my available monies, that it would be around 13 years before I was looking at being debt free.

However once I graduate and get a job I would surely be able to up my payments??

Basically I'm just not sure which option to take, which is best? I understand both affect your credit rating but surely the DRO is worse? Or is it better for me in the long run? Then again I feel I should go ahead with the debt management plan as I got myself into this mess! Arghhh, I'm so confused!

Sorry rant over, basically any advice would be greatly appreciated!

caz2003uk

Hi MissDixie, Welcome to the forum!

I had a DRO from September 2011 to 2012! I was in a horrible situation and had been for a LONG time, there was no light at the end of the tunnel! I couldn't make the minimum payments and my credit file was already in a sorry state!

So after taking advice from the CAB, I went for the DRO and it was the best thing I've ever done! (Not done lightly though I might add!) It is so strange now after so many years of fighting the debts, the collectors, the bailiffs etc to now be debt free!

Having been in the situation myself, and for your future while you can and your debts are relatively low in comparison for some I would advice a DRO! Yes it restricts you for a year, but whats 1 year compared to at least 13!

I will let someone else advice regarding the student loan part though as this I have no experience in!

Good luck with what you go for, and remember there is always advice and support here!

MissDixie

Hello Caz

Thank you for your reply, I know my debts are not a huge amount but when you have little or virtually no spare income and can only make the minimum repayments from borrowing money from family/friends and the constant use of an overdraft, it all just starts to pile up! I can't even afford things I need for my course as I'm constantly trying to keep up my repayments!

I think the DRO is the best way forward for me, I still have three years of university left and I doubt I'm going to get some unexpected windfall of money in that time.

Just a few questions Caz if you don't mind:

1. How have you found building up your credit rating? (I'd like to be able to own my own home one day)

2. Can a DRO affect future employment prospects?

3. Also I have spoke to CCCS and they have sent me out the details this week to go ahead with either DRO or DMP, but in the time it takes the application to go through should I still pay my creditors a token payment? I was advised not too, maybe I should inform them I am seeking help regarding my finances?

Sorry for all the questions I hope to be in your situation one day, debt free!!

caz2003uk

MissDixie wrote: »

Hello Caz

Thank you for your reply, I know my debts are not a huge amount but when you have little or virtually no spare income and can only make the minimum repayments from borrowing money from family/friends and the constant use of an overdraft, it all just starts to pile up! I can't even afford things I need for my course as I'm constantly trying to keep up my repayments!

I think the DRO is the best way forward for me, I still have three years of university left and I doubt I'm going to get some unexpected windfall of money in that time.

Just a few questions Caz if you don't mind:

1. How have you found building up your credit rating? (I'd like to be able to own my own home one day) I'm in the process of this now! 2 of the 3 companies who hadn't updated have replied telling me they have updated them since my letter and even had a £30 cheque as apology from one of them! Im waiting to find out whats happening with the ccj i had, as this is still marked active.

2. Can a DRO affect future employment prospects? Most questions ask "have you ever been made bankrupt" not have you ever had a DRO, so I wouldn't have thought so as the question isn't asked but it may do if the company look further into you. Obviously after 6 years its off your credit file anyway so depends how far in the future! (as far as i know)

3. Also I have spoke to CCCS and they have sent me out the details this week to go ahead with either DRO or DMP, but in the time it takes the application to go through should I still pay my creditors a token payment? I was advised not too, maybe I should inform them I am seeking help regarding my finances? I wouldn't pay them anything as your in the process of it and it shouldn't take too long to get it going! Also I wouldn't tell them unless advised to as this could make them up the pace on taking action and causing more stress! Get the forms back asap and start the process!!

Sorry for all the questions I hope to be in your situation one day, debt free!!

Answers in red above

MissDixie

Thank you, I have just received all my paperwork today, so I shall be cracking on with that