Pre DRO activity

Zimbledon

Hi all

I'm new to this forum but I come here in the hope someone will be able to answer a question for me.

I currently have roughly £7000 unsecured debt with various companies (Credit Cards / Payday Loans), however the majority of these debts are now in the hands of debt collection companies.
I also have a personal debt to my parents of £4000.

I recently lost my job and have been in receipt of Jobseekers Allowance for the last few months. During this time I have enrolled on a course with the OU in an attempt to better my prospects of finding new employment. (Using a tuition fee loan, but for the purposes of this question the student loan won't come into the equation)

Recently I have been advised by my old DMP adviser to look at a DRO to help me since I no longer have disposable income.

The problem with this, is that I currently own a vehicle worth £3000.
If I were to sell this vehicle now, and pay £2000 to my parents and buy another vehicle worth £1000 so that I qualify for the DRO, would they be likely to 1. Find this out and take action, 2. Request the £2000 from my parents that I repaid them.

Apologies for asking for such help in a first post here and my sincere gratitude to anyone that can help with information.
Thanks
Z

National_Debtline

Hi Z

Welcome to the forum.

Zimbledon wrote: »

I currently have roughly £7000 unsecured debt with various companies (Credit Cards / Payday Loans), however the majority of these debts are now in the hands of debt collection companies.
I also have a personal debt to my parents of £4000.

...

Recently I have been advised by my old DMP adviser to look at a DRO to help me since I no longer have disposable income.

The problem with this, is that I currently own a vehicle worth £3000.
If I were to sell this vehicle now, and pay £2000 to my parents and buy another vehicle worth £1000 so that I qualify for the DRO, would they be likely to 1. Find this out and take action, 2. Request the £2000 from my parents that I repaid them.

Trust me, this course of action would be a bad idea as far as a DRO is concerned. Paying your parents the whole of the surplus from the car sale to the detriment of other creditors would constitute "preferential treatment of a creditor" and would prevent your DRO from even getting off the ground.

If you do sell the car, you would need to distribute any such proceeds amongst your creditors on a pro-rata basis in order to remain eligible for the DRO.

Dennis @NDL

Zimbledon

Hi, thanks alot for the reply.
So if I now sell the bike or do a part exchange for a bike of < £1000 value and split the difference between all my creditors, would that be acceptable for entering into a DRO? Can paying anything on personal loans from family be acceptable in this situation or should all the money be split between more 'official' creditors?

Thanks again

jasonwatkins

I hope the OP doesn't mind me jumping in to this thread as I also have a question regarding pre-DRO activity.

Can the receiver go back further than 3 months as far as bank statments go ?.

The reason I ask is that I currently have the £90 fee ready to go to apply for the DRO, but the 'turnover' in my current account for the past 4 weeks has been quite high, due to a successful period of gambling.

This period has not, unfortunately, given me enough to clear off my debts all myself, because I would love to do so, but it has allowed me to clear some of them. The ones that are left though still more than qualify for a DRO because I am also only on ESA.

I'm willing to wait until January before applying so I can have 3 months of "clear" statements, but i just wanted to find out if the reciever can go back further.

I fully appreciate this comes across as trying to pull the wool over the eyes of the receiver but this past 4 weeks has been a totally unexpected anomaly because on my regular ESA, i'd still have no chance at all of clearing my debt situation. And I also fully appreciate the stupidity of gambling in this situation, but that's another story for another thread.

Thanks in advance

wba31

jasonwatkins wrote: »

I hope the OP doesn't mind me jumping in to this thread as I also have a question regarding pre-DRO activity.

Can the receiver go back further than 3 months as far as bank statments go ?.

The reason I ask is that I currently have the £90 fee ready to go to apply for the DRO, but the 'turnover' in my current account for the past 4 weeks has been quite high, due to a successful period of gambling.

This period has not, unfortunately, given me enough to clear off my debts all myself, because I would love to do so, but it has allowed me to clear some of them. The ones that are left though still more than qualify for a DRO because I am also only on ESA.

I'm willing to wait until January before applying so I can have 3 months of "clear" statements, but i just wanted to find out if the reciever can go back further.

I fully appreciate this comes across as trying to pull the wool over the eyes of the receiver but this past 4 weeks has been a totally unexpected anomaly because on my regular ESA, i'd still have no chance at all of clearing my debt situation. And I also fully appreciate the stupidity of gambling in this situation, but that's another story for another thread.

Thanks in advance

The OR will probably not look over anything, rather the intermediary who completes and submits your DRO will be the person who needs to know about your circumstances, and they will ask questions based on the last 2 years.

One such question will be "in the last two years have you preferred any creditors over others in your payments?" which if you have paid off some debts in full and left others with no payment, the answer to this question could be "yes," which may then cause a problem with your DRO. If you approached an advisor with the sum of money you had and all of your debts, they would have looked at full and final settlements, or splitting the money pro rata between them, then enabling you to do a DRO for the remainder

jasonwatkins

wba31 wrote: »

The OR will probably not look over anything, rather the intermediary who completes and submits your DRO will be the person who needs to know about your circumstances, and they will ask questions based on the last 2 years.

One such question will be "in the last two years have you preferred any creditors over others in your payments?" which if you have paid off some debts in full and left others with no payment, the answer to this question could be "yes," which may then cause a problem with your DRO. If you approached an advisor with the sum of money you had and all of your debts, they would have looked at full and final settlements, or splitting the money pro rata between them, then enabling you to do a DRO for the remainder

Thanks for your reply.

My debts, even after paying off the ones I did last week, still total over £5k. Each individual debt is in the 3 figure area as well, so even with the money I won last month, it's highly unlikely I could have had settlements from any of them - maybe one or two I suppose, if i was lucky, but it would most likely have still left me with at least £4k-£4.5k of overall debt as the lion's share of that is an old credit card debt from 10-plus years ago for £3.2k.

The reason it's gone on so long is that I tried to get it statued barred 5 years ago and got the dates wrong, so it's still effectively "live" as far as I know.

I think i might give the national debt line a ring to try and work out the best way forward. thanks again for the reply.

jasonwatkins

Had an interesting chat with the National Debt Helpline.

They did concur that choosing to clear some debts could cause a problem, even though the profit i'd made wouldn't really have had much of an effect on the overall £5k + that I owe.

The debts I did pay off were a Vanquis & Capital One card (both £200 limits) and a Very Catalogue account. The amount to clear all 3 probably came in at around £180 pounds overall though, so it's not like it was a massive amount.

It was mainly done because I was under the impression I wouldn't have to declare them on the DRO as they aren't in arrears or debts, even though technically a credit card is an ongoing debt i suppose.

The advisor said that with the amounts I've talked about, he felt there wouldn't be any real danger of any serious consequences but that the most likely would either be that the DRO would be rejected or that it would be extended. Obviously he advised me that this shouldn't be taken as the final word on the matter though as they aren't the insolvency service.

Also he said that waiting 3 months for some "clean" bank statements wouldn't really have any effects on the chances of it being accepted either so I have to decide what to do and whether or not to apply for it now i suppose.

National_Debtline

Zimbledon wrote: »

Hi, thanks alot for the reply.
So if I now sell the bike or do a part exchange for a bike of < £1000 value and split the difference between all my creditors, would that be acceptable for entering into a DRO? Can paying anything on personal loans from family be acceptable in this situation or should all the money be split between more 'official' creditors?

Thanks again

Hi again Zimbledon

Sorry we couldn't reply sooner to your latest post above.

The safest way to avoid any "preference" of a creditor in this scenario is to divide any such cash between your creditors on a pro-rata basis. You are entitled to treat family debts in the same way as consumer or "official" debts. Bear in mind that it may help if you have any sort of paper trail to show how much those family members lent you in the first place.