first post ever.. DRO advice please

lizisintrouble

hello everyone

I have been getting some amazing help from this site indirectly through my university mentor posting here about my circumstances.

She has given up lots of her own time to help me as has a member of this forum who has never met either of us. i cannot believe how generous people have been with their time. I couldn't face posting myself, for fear of being judged but the goodwill of others has given me the strength to post:j:j:j

I am looking for advice from those experienced is the debt relief order process.

I owe 14,500 and due to circumstances changing i cannot afford to pay it. I have literally worked myself ill trying.

I have another appointment with the CAB in less than 2 weeks, but yesterday i spoke to cccs My mentor at university said the advice she was given on my behalf was to speak to 2 or 3 companies to get a feel for who i am comfortable with.

I have a few concerns over conflicting information and am looking for answers really

My DRO may not start for a few months yet as today i have been asked to cover the remainder of some maternity leave (10 weeks) at work - so my disposable income will rise above the £50 a month surplus- i fully intend to pay every single penny of my debts as there is a slight chance this may be a permanent move if the lady doesn't come back to work which also means a payrise of 25% on top of double the hours.

Anyway, a family friend has also offered to gift me some money to help me financially. Their words were 'you will be left it in my will so may as well have it now if it helps'.

I plan to pay off some of my priority debts ie CCJ, council tax, gas, electricity, water. That will leave me £2000 of the £3000. The CAB have said I CAN pay off PRIORITY DEBTS in full and then pro-rata the rest accordingly. i.e. if i owe £10,000 and have £2000 i can pay off i must pay £1 for every £5 I owe regardless of the amount owing. The same with surplus income.


HOWEVER CCCS have said i cant do this as it will be treating creditors unfairly.

I disagreed and said i need to pay the CCJ off asap as if paid before 30/3/13 will be removed from my credit file.Why does this matter? I privately rent and in 18 months time will need to move again. A CCJ will make that almost impossible - by that time the public info regarding the DRO will no longer be on file. With the gas, elec, council tax i need to make sure my children are warm and have electricity so these need to be paid asap too.

So, can anyone advise re the above? Who is right CAB or CCCS?

I do not wish to take money that is being gifted to me to help get myself in a better position financially only to find that it is that very gift of money that has 'disqualified' me from a DRO (if the job is only temporary) as i paid creditors with it!

Thanks if you have read this far.
Liz

wba31

lizisintrouble wrote: »

Anyway, a family friend has also offered to gift me some money to help me financially. Their words were 'you will be left it in my will so may as well have it now if it helps'.

I plan to pay off some of my priority debts ie CCJ, council tax, gas, electricity, water. That will leave me £2000 of the £3000. The CAB have said I CAN pay off PRIORITY DEBTS in full and then pro-rata the rest accordingly. i.e. if i owe £10,000 and have £2000 i can pay off i must pay £1 for every £5 I owe regardless of the amount owing. The same with surplus income.


HOWEVER CCCS have said i cant do this as it will be treating creditors unfairly.

I disagreed and said i need to pay the CCJ off asap as if paid before 30/3/13 will be removed from my credit file.Why does this matter? I privately rent and in 18 months time will need to move again. A CCJ will make that almost impossible - by that time the public info regarding the DRO will no longer be on file. With the gas, elec, council tax i need to make sure my children are warm and have electricity so these need to be paid asap too.

So, can anyone advise re the above? Who is right CAB or CCCS?

I do not wish to take money that is being gifted to me to help get myself in a better position financially only to find that it is that very gift of money that has 'disqualified' me from a DRO (if the job is only temporary) as i paid creditors with it!

Thanks if you have read this far.
Liz

If you wish to a do a DRO in the future all debts are to be treated the same, irrelevant of whether they are priority now or not. If the money is given to you, and then you pay this onto these debts and then do a DRO, you would have to answer "yes" on your DRO to preferential payments withing the last 2 years, and you could then see your DRO revoked.
If the payments of this money were not given to you to pass on, but the 3rd party made the payments directly, then this isnt preferential as you havent made the payments, a 3rd party has.

If you have a CCJ, it will already be on your credit file, and should you go for a DRO the CCJ must have been treated fairly alongside all other creditors.

If you wish to do a DRO, they will clear your debt, using an early inheritance to simply reduce your debt level is a waste of £2000, when the debt will be written off in a DRO anyway...

I would recommend you reject the gift of money, go back to Step Change Debt Charity (formerly CCCS) and if your budget fits just get a DRO done, the turn around time for their DRO's is within a week once paperwork is received

lizisintrouble

wba31 wrote: »

If you wish to a do a DRO in the future all debts are to be treated the same, irrelevant of whether they are priority now or not. If the money is given to you, and then you pay this onto these debts and then do a DRO, you would have to answer "yes" on your DRO to preferential payments withing the last 2 years, and you could then see your DRO revoked.
If the payments of this money were not given to you to pass on, but the 3rd party made the payments directly, then this isnt preferential as you havent made the payments, a 3rd party has.

If you have a CCJ, it will already be on your credit file, and should you go for a DRO the CCJ must have been treated fairly alongside all other creditors.

If you wish to do a DRO, they will clear your debt, using an early inheritance to simply reduce your debt level is a waste of £2000, when the debt will be written off in a DRO anyway...

I would recommend you reject the gift of money, go back to Step Change Debt Charity (formerly CCCS) and if your budget fits just get a DRO done, the turn around time for their DRO's is within a week once paperwork is received

Thank you for the advice, it is very welcome. i wont be applying for the DRO if my extra hours become permanent and i have been offered the hours for 10 weeks - so will only be applying end may/start of june. Due to the needs of my middle child my work prospects are limited. i need very flexible hours and have been waiting 3 years for more hours/better job to come up where i work and i am not passing up the offer.

The idea of the gifted money is to give me breathing space over the next 10 weeks (monthly pay and the way we get paid means i start my new hours monday but will not get paid for them until end April so i need to find the CCj payments etc). i cant go on worrying if the knock on the door is debt collectors or not.

I am reluctant to pass up the opportunity of better job prospects and the chance of being able to repay my own debt- hence only starting the DRO if i dont get the job on a perm basis

the CCJ will be removed from my file if i pay it within this month - it is removed from your credit file if paid within 30 days. By paying the CCJ off it will secure future housing needs.


so, if i got the person who has offered me the money to pay these priority debts (in full) directly then i can rest easy i have not given pref treatment to creditors? The remainder can be given to me and i can pro-rata it accordingly?

to me its not a 'waste' of money, it is me accessing money to try and repay some of the debts i owe. if i do need to go down the DRO route at least in my mind i will know i have paid every single penny that i can and that to me seems better than just not paying anything.

sorry if all that sounds a bit 'snotty' i am trying to keep my level head on and be as factual as i can by giving reasoning and not emotions in my answers

Also, how does ebay selling work on a dro? My children are young so i tend to sell things they have grown out of to fund new clothes. its not buying to sell on to make money - im selling to replace ?

wba31

lizisintrouble wrote: »

Thank you for the advice, it is very welcome. i wont be applying for the DRO if my extra hours become permanent and i have been offered the hours for 10 weeks - so will only be applying end may/start of june. Due to the needs of my middle child my work prospects are limited. i need very flexible hours and have been waiting 3 years for more hours/better job to come up where i work and i am not passing up the offer.

The idea of the gifted money is to give me breathing space over the next 10 weeks (monthly pay and the way we get paid means i start my new hours monday but will not get paid for them until end April so i need to find the CCj payments etc). i cant go on worrying if the knock on the door is debt collectors or not.

I am reluctant to pass up the opportunity of better job prospects and the chance of being able to repay my own debt- hence only starting the DRO if i dont get the job on a perm basis

the CCJ will be removed from my file if i pay it within this month - it is removed from your credit file if paid within 30 days. By paying the CCJ off it will secure future housing needs.


so, if i got the person who has offered me the money to pay these priority debts (in full) directly then i can rest easy i have not given pref treatment to creditors? The remainder can be given to me and i can pro-rata it accordingly?

to me its not a 'waste' of money, it is me accessing money to try and repay some of the debts i owe. if i do need to go down the DRO route at least in my mind i will know i have paid every single penny that i can and that to me seems better than just not paying anything.

sorry if all that sounds a bit 'snotty' i am trying to keep my level head on and be as factual as i can by giving reasoning and not emotions in my answers

Also, how does ebay selling work on a dro? My children are young so i tend to sell things they have grown out of to fund new clothes. its not buying to sell on to make money - im selling to replace ?

You dont sound snotty, it's entirely your choice how you approach this, myself and the other advisors will highlight things like that as we want to see you successful in becoming debt free, but not making uninformed decisions in the process of doing so, which this decision clearly isnt uninformed due to thinking about the bigger picture with it.
So yes, if payments are made direct from 3rd party to your account with whomever, they are not preferential payments and should mean you are fine to continue.
With regards to Ebay, how much do you turn over each month. if less than £300 i cant see there being an issue with it really...

lizisintrouble

Thanks.

Oh i wish it was £300 a month! Its only every few months and is literally clothes the kids had outgrown, maybe £150 -£200 3 or 4 times a year. Then i would buy clothes for them with what ever i make

I did try to start an ebay shop last year to try and help with cash flow (I did it correctly ie registered with HMRC etc but it was taking so much time and i was earning little (less than MW) so I have stopped doing that now. HMRC said i don't need to tell them im no longer doing it just fill in the tax return when due etc) I was thinking of starting up again but the extra hours at work would now make that impossible.

I really appreciate any assistance.

debt_doctor

wba31 wrote: »

If the money is given to you, and then you pay this onto these debts and then do a DRO, you would have to answer "yes" on your DRO to preferential payments withing the last 2 years, and you could then see your DRO revoked.
If the payments of this money were not given to you to pass on, but the 3rd party made the payments directly, then this isnt preferential as you havent made the payments

Whilst certainly I agree that a third party making payments is 'very safe' It would not be a preference if you used the monies pro rata across all creditors, in that way you preferered no one - you treated all creditors the same and could answer no in the application.
In any case a preference has an action and an intent according to the Insolvency act 1986, in that it is making a payment, other than in the ordinary course of business with a view to improving that creditors position if you were to become insolvent. It is designed to capture repaying family and friends.

DD

DD

lizisintrouble

debt_doctor wrote: »

In any case a preference has an action and an intent according to the Insolvency act 1986, in that it is making a payment, other than in the ordinary course of business with a view to improving that creditors position if you were to become insolvent. It is designed to capture repaying family and friends.

DD

DD

Hi DD. I understand it is you that has been helping my mentor with all my relentless questions over the last few days. Thank you. Its because of your kindness i have mustered the confidence to post here.

I dont fully understand the bit quoted above? Sorry. This is all new to me.

I have a ccj that was granted last week. If this is paid within 30 days it will be removed from my report. This means when i have to move in 18 months time there will be no 'public data' on my file so i will be able to privately rent again.

If a 3rd party paid this for me is this pref of creditors? Its all so complex. I want to clear my debt myself if possible. I read about 'snowballing' ie paying off highest interest first but i reaslise this is putting one creditor above another. so that is out the window until i know if the job is perm

It seems a little crazy that by tackling the highest debt first i would be paying less overall but this will exclude me from a DRO if i fail to secure the extra hours ft

The 3rd party wants to pay all my priority debts - ie council tax, the ccj, water, gas, elc arrears in full. ie The things that are threatening our basic standard of living Then give me the remainder to distribute pro-rata to rest of creditors. Is this a no-no. Will i have to declare i have given preference?

Just to add the CAB said it was ok to do as suggested, CCCS said it wasn't. Hence asking here

debt_doctor

Hi,

Yes I have been assisting you via your mentor.

A third party can do whatever they like with their money, so if they want to pay off that CCJ for you then that's fine.
Similar, if the 3rd party wants to pay off your council tax or other bills then that is up to them.

DD

caz2003uk

I would be a little worried about how close you are to the £15k maximum debt limit.

I know you have said about having money to pay some off etc but is any of your debt incurring interest which would take you above the 15k?

Of course if you do go down the route of making a payment to your creditors from your 'gift' then the above should be fine, but I wanted to you to keep that in mind if interest may take you above before you come round to applying.

lizisintrouble

caz2003uk wrote: »

I would be a little worried about how close you are to the £15k maximum debt limit.

I know you have said about having money to pay some off etc but is any of your debt incurring interest which would take you above the 15k?

Of course if you do go down the route of making a payment to your creditors from your 'gift' then the above should be fine, but I wanted to you to keep that in mind if interest may take you above before you come round to applying.

Hi there, thanks for responding. I was worried about this too. But the extra hours i am getting and temp pay rise will mean i will be paying the extra pay straight off my debts minus extra expenses like extra fuel costs, parking costs etc.

Even if the worst happens and i don't get the extra hours on a perm basis the gift from family friend plus 10 weeks at the higher wages will mean I will have paid £3000 off my debts in 10 weeks. (£2000 from friend and minimum of £100 a week for 10 weeks) = £11,500 (plus any charges i incur in the meantime but a lot have defaulted so i dont think i can have much added in the way of extra charges)

If i can get the hours on a perm basis i will also get a hourly rate payrise. So I have figured (as a rough guide, i do need to look into interest charges etc) if i do get the hours and can stick to the budget i have set (which is generous whilst still being frugal) I should be able to pay my £140 a week off my debts - my debt would be paid off in 2 years. i am really hoping the lady doesn't come back from mat leave now as I am so upbeat about maybe seeing light at the end of the tunnel.

Worst case, if she does come back to work my debt will be £11,500 and the CAB have said as long as i have all the info they need they can process the DRO within 24 hours. I have booked another app to see them the day after my extra hours end so we can either start the dro process or look at the best way to pay the debt off with my extra £s. Plus i can sleep a little easier knowing i have tried so hard to pay off my debts. It still sits a little uneasy with me that they will be 'written off' so to speak.