When to apply for DRO?

Deangelo

I may be having my first ever CCJ soon. I am unable to keep up with repayments due to unforseen family and work problems.

They gave me another 30days but that has gone and now seriously saying they will bring a CCJ against me unless I can make payments again.

My situation is now Im out of work and not even enough benefits to live on, no matter repaying debts from years ago.

The CAB advised me to apply for a DRO, they said I am classic material for one, they have all my info and they say its my best bet.

My feeling is this is a last resort, I am frantically trying to get back into work. But realistically some interviews I have been to there are 30+ for one position.

So if I still havent got a job in a few months or something and if they really do bring a CCJ against me, I could then apply for a DRO couldnt I?

Would I regret not doing it sooner? Even if I can get back into work, unless I am earning a lot in my first year after the DRO, all my old debts are still written off are they not?

viv0147

Providing you owe less than £15,000 yes and if your circumstances change in the first year you let them know go for it

Tixy

What are your level of debts?

One thing to consider is if you are near to the £15k limit now is whether your debts may rise due to interest or not being able to keep on to of debts and so you end up not being able to qualify for one.

Another thing is that if you are paying anything towards your debts now then doing the DRO will mean that you'll find it easier to manage on your benefit income now.

Even if I can get back into work, unless I am earning a lot in my first year after the DRO, all my old debts are still written off are they not?

Its about your surplus income after living expenses. You wouldn't necessarily need to be earning much to have more than £50 surplus a month after basic living costs.

In relation to the CCJ - it wouldn't stop you applying for a DRO assuming you still met the qualifying criteria at that point.

Deangelo

viv0147 wrote: »

Providing you owe less than £15,000 yes and if your circumstances change in the first year you let them know go for it

I hope to be back in work with in a year. But I know lots of people are saying that. So would I have to start paying back if I did get a job after going for a DRO?

Deangelo

Tixy wrote: »

What are your level of debts?

One thing to consider is if you are near to the £15k limit now is whether your debts may rise due to interest or not being able to keep on to of debts and so you end up not being able to qualify for one.

Another thing is that if you are paying anything towards your debts now then doing the DRO will mean that you'll find it easier to manage on your benefit income now.


Its about your surplus income after living expenses. You wouldn't necessarily need to be earning much to have more than £50 surplus a month after basic living costs.

In relation to the CCJ - it wouldn't stop you applying for a DRO assuming you still met the qualifying criteria at that point.

OK thanks that answers my last question. So if I did get back into work, then it all depends if I have £50 surplus at the end of everything.

I suspect after paying rent and everything that is all that would be left. But there is a lot of room for maneuvering I mean is money spent on booze/fags considered essential in working out how much I NEED to spend? Do I have to get a doctors note saying I really am addicted?

My debts are well under £15K. I dont have a car. But my rent I pay is now a lot higher than my housing benefit after all the benefit cuts. Lots of my benefit now has to go to my landlord.

fatbelly

So if you didn't pay anything towards your debts, including nothing to arrears on water, electricity or gas, could you afford to live on the income that you have?

If not, then that is your primary problem. Maybe you need different accommodation.

I know this goes against the grain, but I am meeting increasing numbers of people who actually need credit until they can find additional income to make their budget balance, and they will consider a DRO later on, as long as they are still under 15k debt.

Deangelo

fatbelly wrote: »

So if you didn't pay anything towards your debts, including nothing to arrears on water, electricity or gas, could you afford to live on the income that you have?

If not, then that is your primary problem. Maybe you need different accommodation.

I know this goes against the grain, but I am meeting increasing numbers of people who actually need credit until they can find additional income to make their budget balance, and they will consider a DRO later on, as long as they are still under 15k debt.

I can just about live on my benefits. Im sure I have less than £50month surplus. What I am trying to find out is if I do get back into work, then my income will be more. Can I still apply for a DRO, making my income still less than £50 surplus? Or if I went for a DRO then got a job in my first year?

so it would mean changing my budget as I asked before things like Alcohol and cigarettes for example. Is it OK to spend a little more on some things if your income goes up so that you can still end up with under £50 surplus?

Tixy

On a DRO you are expected to live to a fairly basic budget.
If you started working then it would be expected that certain costs would increase, most obviously travel costs.

I'd suggest talking to CAB or one of the other debt advice charities in more detail about a DRO and how a change in circumstances would affect your DRO.

Deangelo

Tixy wrote: »

On a DRO you are expected to live to a fairly basic budget.
If you started working then it would be expected that certain costs would increase, most obviously travel costs.

I'd suggest talking to CAB or one of the other debt advice charities in more detail about a DRO and how a change in circumstances would affect your DRO.

They say the same as you. As I understand it, if your situation changes and you have more than £50 surplus per month then you have to start paying back some of your creditors.

this is crazy, almost encouraging people not to look too hard for work. I am frantically looking for work. Applying for several jobs today alone. Its hard out there.

Tixy could you please answer something else for me? My wife is working a few days per week. She has no debts and a good credit file. I know I must have damaged her file now I have a few defaults.

But how does it work going for a DRO? Shall I do it as a couple, both our income and expenses or just myself? Is there a choice? Or does it have to include her earnings and expenses? She has very high expenses at the moment because she is doing an expensive training course that she is paying for herself. So we have no where near £50surplus at the moment, more like minus -£50 month. Her training course is for another two years if we contiune paying for it.

Tixy

Do you have any joint accounts with your wife? or have you had any in the past (joint bank / loans / mortgage)? If not then she will not be showing as a financial associate and your credit file would not affect her credit file or her ability to get credit.

For a DRO your income & expenses are worked out as an individual. When you are part of a couple they will consider a proportion of household costs to be paid by you and some by her. And then will look at your own individual costs.

I suppose with a DRO if you enter one now and then are unfortunate and don't get a job within the next year then your debts will be written off in 12months time.
If you are able to get a job then yes you may have the DRO revoked and your debts with then be due again, but then your debts would have been due if you hadn't entered the DRO.

National_Debtline

Deangelo wrote: »

this is crazy, almost encouraging people not to look too hard for work. I am frantically looking for work. Applying for several jobs today alone. Its hard out there.


Hi there Deangelo

Anecdotally speaking, I don't believe there have been significant numbers of DROs being revoked due to disposable income rising over the £50 threshold. Of those that are revoked, a lot are due to previously undeclared debts coming to light and pushing the total over £15,000, or due to concealed assets emerging.

In other words, most revocations are due to applicants giving misleading information, as opposed to being "punished" for managing to find work during the moratorium period. I can understand how one might see it this way, though.

Dennis @NDL