DRO or BR?

Kent77

Hi,

I am at the beginning stages of trying to sort my finances out after a recent breakup.

I have calculated my total unsecured debt as c. £13,700

My take home pay is currently £1200 a month and my outgoings now stand at around £1500, which obviously isn't sustainable (2 incomes now being just 1). All debt is my responsibility.

I have a car worth around £500 and no other assets, and I rent my home.

A SOA suggests that my disposable income would currently be below £50 if anything.

Sounds like I would qualify for a DRO, right?

At work, I am due to start a 6 month secondment which would give an increase in wages of around £100-150 per month for those 6 months. The secondment was supposed to start in April, but it has been delayed and could end up being as late as October, or even cancelled altogether (it's complicated).

So, this secondment would mean I have some disposable income (not the full amount as petrol costs would increase as it means travelling between sites, rather than just the one I'm based at). I'm assuming this would forfeit the DRO?

Also, come next April, I get an annual wage increase that would, along with a presumed tax allowance increase up to the Lib Dem's favoured £10,000 threshold (look at me, thinking ahead!) would mean an approximate £50-60 a month increase.

Now, along with the continual rise in living costs, any future increase in income as detailed above is not sufficient to pay my debts off in a reasonable timeframe, and short of anyone handing me a big cheque for 6 or 7 figures, is the ongoing status quo for many years to come.

So, given the above information, am I being prudent to decline the DRO path and elect to file for BR and pay any potential surplus income during the secondment to an IPA, with the expectation of either no IPA or a very small one before and after the secondment?

I will be contacting StepChange next week (when I am available to contact them during their opening hours) but in the meantime, any thoughts on the above are most welcome.

Thanks.

Kent77

Any advice appreciated. Please.

debt_doctor

Hi,

I suggest that you put up your SOA (without debt repayments) for us to look at.
The financial 'allowances' are far more realistic in DROs than BR. A rough guess in a DRO would be say £320 housekeeping, £250 for running your car, all normal household costs and perhaps £ 140 pm for sky/ leisure / etc.

DD

Kent77

£320 for housekeeping and £250 for running my car? I wish!

Here's my SOA....

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1200
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1200

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 499
Management charge (leasehold property).. 0
Council tax............................. 85
Electricity............................. 75
Gas..................................... 0
Oil..................................... 0
Water rates............................. 38
Telephone (land line)................... 14
Mobile phone............................ 10
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 23
Groceries etc. ......................... 210
Clothing................................ 20
Petrol/diesel........................... 75
Road tax................................ 12
Car Insurance........................... 35
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 11
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 10
Emergency fund.......................... 10
Total monthly expenses.................. 1180


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-


Monthly Budget Summary
Total monthly income.................... 1,200
Expenses (including HP & secured debts). 1,180
Available for debt repayments........... 20
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 20

Personal Balance Sheet Summary
Total assets (things you own)........... 500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -0
Net Assets.............................. 500

Created using the SOA calculator at can't post links yet.
Reproduced on Moneysavingexpert with permission, using other browser.

Kent77

Any advice at all?

The way I see it is I have 2 choices...

DRO: Find £90. Turn down the secondment and extra income (along with any potential career advancement that might bring, or not, who knows?) so as not to push past the £50 disposable income limit.

BR: Find £700. Accept the secondment and start an IPA in approximately Sept/Oct with the increased income going into that for the 6 months and then running the IPA at approximately £0 subject to 2.5 years of reviews asking if my money has gone up or not.

Caveat: Secondment might not happen at all.

I really don't know which one to go for.