DRO &other options

Bugsy1980

I spoke to the CAB a few months ago and they recommended doing a DRO. For the cab to take my case i came out of a dmp with another company that I'd been in for 7 years and was barely making any dent in any of the amounts I owed. Now I've had my credit report through the total debts are £15,126. So over the dro limit.

As the amount I'm over 15k by is less than the cost of bankruptcy and I can't afford to pay very much back a month - i was giving the debt management company £40 a month & that was higher than the surplus they worked out I had (£5 a month!). I'm single, disabled and still on low income due to current physical and mental health problems which doesn't seem likely to change in near future.

So what I was wondering is if I can pay off one of smallest debts like say barclay card for £252 which would take me under the 15000 mark could I the do a dro? Or do the insolvency people see that as cheating and stop you doing it?

Without the dro I'm never going to get rid of the debts and will forever be paying off less than the interest adds on.

Any help gratefully received as my cab man is away for 2 weeks.

Helpmeoutofthismess

Bugsy1980 wrote: »

I spoke to the CAB a few months ago and they recommended doing a DRO. For the cab to take my case i came out of a dmp with another company that I'd been in for 7 years and was barely making any dent in any of the amounts I owed. Now I've had my credit report through the total debts are £15,126. So over the dro limit.

As the amount I'm over 15k by is less than the cost of bankruptcy and I can't afford to pay very much back a month - i was giving the debt management company £40 a month & that was higher than the surplus they worked out I had (£5 a month!). I'm single, disabled and still on low income due to current physical and mental health problems which doesn't seem likely to change in near future.

So what I was wondering is if I can pay off one of smallest debts like say barclay card for £252 which would take me under the 15000 mark could I the do a dro? Or do the insolvency people see that as cheating and stop you doing it?

Without the dro I'm never going to get rid of the debts and will forever be paying off less than the interest adds on.

Any help gratefully received as my cab man is away for 2 weeks.

Hi, you can't just pay off one debt to get under the limit as that would be showing a preference. What you can do though is work out how much you need to pay to get under the limit and then make a payment to all your creditors. You need to allocate the payment on a pro rata basis to make it fair on all of your creditors.

Alternatively if the payment will be coming from a third party, they can pay whoever they want as long as it's them making the payment and not you, it won't be a preference.

H x

longtermplanner

The bad news is that you have to get quite a bit under the £15,000 limit. A DRO has to be proposed by an authorised intermediary (such as a CAB advisior) and most will not put forard a proposal just below £15000 as a creditor adding a bit of interest could take you over the limit and the DRO would be rejected.

The advice from H above is good - you can't pay off just one creditor.

If there isn't anyone else that could help you, then you may well feel very stuck. One option would be bankruptcy instead. The bankruptcy fees are high but in your situation CAB can probably help you get a grant from a charity for them.

Another option would be to wait a wile, carrying on with a DMP in the meanwhile. There is currently a DRO consultation in progress about increasing the £15,000 limit. I would expect this will be increased so you would then be under it. I don't know what the timescales for this would be, I haven't checked if it would require primary legislation which could take ages or just secondary legislation which can be quite quick.