Using cards directly prior to DRO application

paradise_lost_2

Hey all,

I'm just about to apply for DRO on advice of StepChange, my question is whether or not it's still okay to use my credit card before I've sent the DRO off? I need some food shopping and a uniform for my student placement, and will need to use my actual cash for the £90 payment. Will it be 'frowned upon' for my statement to show that I've spent money on the credit card so recently or is it irrelevant what activity has gone on there as long as I a) don't have assets of £300 and b) owe under £15k total?

Thank you,

x

wba31

paradise_lost wrote: »

Hey all,

I'm just about to apply for DRO on advice of StepChange, my question is whether or not it's still okay to use my credit card before I've sent the DRO off? I need some food shopping and a uniform for my student placement, and will need to use my actual cash for the £90 payment. Will it be 'frowned upon' for my statement to show that I've spent money on the credit card so recently or is it irrelevant what activity has gone on there as long as I a) don't have assets of £300 and b) owe under £15k total?

Thank you,

x

Within the first 30 days of any submitted DRO, the creditors have the right to object to the making of the DRO, and one of the criteria that they can use for objection is "recent use of credit," which may then see the DRO revoked, after which you do not get your £90 back. Anything prior to getting debt advice is generally overlooked, but now you have had the advice i would not say it is a good idea to use your cards now.
I suggest you use your £90 for your essentials, and either wait to pay the £90 and start your DRO, or ask someone for help with the fee, friend, relative or even apply for a trust fund. The trust fund is a long shot however, but i believe step change can advise you on looking at that.

but to summarise again, i wholly recommend you not using your credit card, but destroying it and disposing of it to remove the temptation to do so

paradise_lost_2

Thank you! I have used it last night for £60 (petrol plus food) as I wasn't aware it wasn't okay, but I'll make sure to refrain from now on. Hopefully that's small enough an amount for them to overlook? Is it more if it has been used for hundreds/thousands? I won't use it again x

wba31

paradise_lost wrote: »

Thank you! I have used it last night for £60 (petrol plus food) as I wasn't aware it wasn't okay, but I'll make sure to refrain from now on. Hopefully that's small enough an amount for them to overlook? Is it more if it has been used for hundreds/thousands? I won't use it again x

It's impossible to say, some low uses may be picked up and some high ones overlooked, ive never noticed a pattern.

Some may argue that as soon as you approach someone like Step Change or CAB for advice you are admitting that you are struggling to pay the debt, which then suggests any borrowing after that is done knowing that you are not in a position to honour full contractual payments. The difficulty comes in not knowing how any creditor will respond to £60 once submitted, but i would hope for more understanding for £60 on fuel/food as opposed to £60 on a meal out or a few cds off amazon etc...

paradise_lost_2

I'm still making min payments on all of my debt, so still honouring the contractual agreements... And I'll assumedly be doing so until the DRO is approved... The stepchange application says to cancel direct debits paying the debts once the application is submitted, but I thought ŷou had to continue paying until it was approved?

The advice from stepchange has been great so
Far, other than that they never really told me what to do regarding my usage of the card in between advice and approval. I also couldn't find any info online on whether they take into account what your recent outgoings have been or whether the balance is all that matters, that part has been v confusing, and now am worried that by buying stuff on it in the past week I may have jeopardised it

paradise_lost_2

Oh, I haven't submitted it yet. I am still in the process of filling the forms out, I fully expected that once submitted I would incur no further debt. Thanks for all your help so far guys, it's an intimidating and confusing process!

paradise_lost_2

Also, I believe (but am not certain) that I owe an electricity company from a place I lived a few years ago, we always paid our bills but they claimed we owed extra from being a tenner or twenty pounds short per month, they based it on estimated readings and we were unable to give them a proper reading due to landlords not allowing us the key to the meter box.

I emailed the company asking if I owe anything so that I can get a statement and include it in the DRO. We never set up a payment plan so I never avoided payments technically, will that count as having favoured one creditor over another ? (as I've never missed a payment with my loan, CCs or o/d). It was solely in my name though my ex an I both paid for the bills, ironically my ex had bad credit so it all went in my name, meaning when he broke up with me and disappeared I was pretty much !!!!ed, in the midst of the trauma I moved to stay with a friend and as I felt we had always paid the bills I just triEd to forget about it. Foolish I know. My mum had just died and i was seriously unwell off work sick ran out of sick pay so up !!!! creek emotionally, practically and financially though I know creditors wouldn't care cos we all have a sob story. Guess I'm just trying to justify it because I'm embarrassed to be in this position at 25.

wba31

paradise_lost wrote: »

I'm still making min payments on all of my debt, so still honouring the contractual agreements... And I'll assumedly be doing so until the DRO is approved... The stepchange application says to cancel direct debits paying the debts once the application is submitted, but I thought ŷou had to continue paying until it was approved?

The advice from stepchange has been great so
Far, other than that they never really told me what to do regarding my usage of the card in between advice and approval. I also couldn't find any info online on whether they take into account what your recent outgoings have been or whether the balance is all that matters, that part has been v confusing, and now am worried that by buying stuff on it in the past week I may have jeopardised it

I would advise you to cancel all payments now. the point of the DRO is that you're saying you cannot afford to pay the debts due to having less than £50 a month left over each month. There is nothing the creditors will do if you've maintained payments between now and you having your order submitted, so stop paying, get your £90 fee set aside, and once you have sent your stuff into Step Change, I'm sure it won't take long for them to contact you to advise how to complete the process

paradise_lost_2

Well, I spoke to StepChange who told me that I need to wait three months from last using my credit card before I can apply for the DRO, I can do it before then but it's a gamble as Barclays (the one who I have an active CC with) may reject it on the grounds that I've used funds directly prior to the DRO while knowing I can't pay it back, so that's cleared that up.

Have cancelled my standing orders/direct debits to creditors, informed them of what's going on (Barclays spoke to me like !!!!... querying why I had a £60 total Tesco spend on the card recently and asking what it was for, I told them it was none of their business and they basically inferred that refusing to answer would go down on my file, which I assume would look bad... when I told them politely I didn't think I was under any obligation to explain myself she got really rude... made me feel like a piece of dirt, was quite upsetting), told everyone I can pay £1 a month and cut up my cards. Now it's time to try and live on what I earn, it's scary because things happen you can't see coming, like a crown on my teeth or a cracked windscreen or burst tyre etc. and now there is no safety net... it's giving me a feeling of anxiety but I guess that'll dim down.

LTSB I actually made a complaint to as I had to spend 90 mins being given wrong numbers and calling about seven different departments, some of whom I couldn't understand (very quiet line/accent issues) until I finally got through to someone who told me that I had to write to them and tell them my intentions.

No doubt I'll be lingering around here for support...

One worry I have is that 12 months from now I'll still be finishing my course, but 15 from now (i.e. after the 12 weeks pre DRO and then the 12 months of DRO) I'll have finished and qualified and may be able to access a better paid job (not brilliant, but probably enough to push me over £50 a month spare). Am I right in thinking that in order to get it all wiped at the end of the DRO rather than have to start paying everyone back (having utterly destroyed my credit rating for years in the process) I'll have to wait to job hunt until a few months post-graduation? That's the thing bothering me the most, everyone looks for jobs after their second placement and I can imagine having to hold back for a while. Has anyone had this happen where at the end of the DRO you're slightly better off and therefore have to keep all of the debts?

Cheers everybody.

cheesedoffwithdebt

I think you'll find creditors will be unbelievably rude- I can understand what you felt, they don't get it either that you are now at the stage of needing to use cards for food and essentials, not random extras. Forget the threat, the people they employ in these departments, (goodness knows what they are like socially because they are just rottweilers) will just be gratuitously rude, and the premise is they want you to feel so bad you suddenly are able to service your debt after all (don't forget that sadly, there really are people around who don't want to pay their way and do tell porkys to the banks).
Try to do as much as possible in writing, there are templates I think on here ( see if you can get hold of Fermi) for standard letters, I think National Debtline also have some letter templates as well.

As far as paying your way is concerned, it can be done. I had my lightbulb moment early 2009- started with a DMP and am now in an IVA. I've been living without credit for 4 and a half years, and it can be done.
I've found ways to reduce my food spend, (batch baking mainly), have discovered Freecycle, reduce my utility bills (free solar panels and a change of provider). There are some excellent resources out there to help you learn to manage money, but it does take time because old habits die hard. So don't get anxious- get learning, save and you will get through this time if you work hard at it.

best of luck :T

paradise_lost_2

Hey all,

Just wanted to update I was accepted for my DRO last month, it's a huge weight off my shoulders now and the debt payments I no longer have to meet mean that I can now save a little each month towards the kinds of emergencies that I'd previously have relied on credit cards for (car repairs and so forth).

I was told by StepChange to wait three months after the last credit card usage to file, so that creditors can't claim you were spending while knowing you were unable to pay it back, so I did that. I feel a bit sad that I've had to do this at 25, but at least I have taken action and now it is under control, sure I won't be able to get any credit for years but it is forcing me to learn what it's like to live within my means and solely on my wages, so it has been a positive life lesson overall.

Thank you for all your advice.