DRO and Tax Credits underpayment

minniepoos_2

Hi, I have a question I was hoping somebody could help me with. I'm preparing all the information I need for when I go to the CAB on Monday and applying for a DRO. Years ago I was overpaid Tax Credits and it took several years to repay, so since then I have always underestimated my yearly income so ensure it doesn't happen again. If I'm on a DRO and I get a Tax Credits payment to make up what I've been short all year - will it mean my DRO gets cancelled?

National_Debtline

Hi minniepoos

Some guidance below which will hopefully be of use.

• Where a debtor receives an asset, for example, backdated benefit, PPI refund, a windfall or any other property valued at more than £300 during the moratorium period, the OR will not revoke the DRO in all cases as long as the debtor is open and honest and the value of the asset is less than £700. The client should notify the OR within 14 days of receiving the lump sum.

• For all lump sums received between £700 and £1750, each case is assessed on its own merits taking into consideration numerous factors, including, but not limited to, liabilities, health, personal circumstances, age and so on. A decision will be made on a case by case basis as to whether it would be appropriate to revoke or not.

• For lump sum payments in excess of £1750, it is more likely that a DRO may be revoked, although any mitigating factors would be included in the decision.

• If a backdated payment results in a permanent increase in disposable income but not necessarily expenditure, bringing the surplus to over £50 per month, then this could lead to the DRO being revoked.

• Where a debtor receives a backdated lump sum as well as an ongoing increase in income, they will need to tell the Insolvency Service about the lump sum received and also complete a new personal budget sheet.

Regards

Dennis @NDL

minniepoos_2

That's very helpful, thanks ever so much.

MP