Paying off a DRO

gethinoakes

Hi guys. Can't find information on paying off a DRO anywhere, not even on the insolvency service website.

I have a DRO that's due to end March 2015, but I want to start paying off the debts because I am now in a position to do so and I don't want to have the financial strain it will put on me for 6 years after...

My debts come to around £6,000 all together from about 5/6 different sources.

I have a few questions if anyone knows the answers...

1) Will interest start again when I start to pay off the debts, or is it just the balance at the time the DRO was taken out?

2) Do I pay the whole debt off as if it is one, or do I pay each individually?

3) Who do I pay? The insolvency service or each company separately?

That's it for now I think... thanks in advance

alastairq

http://debtcamel.co.uk/debt-options/dro/

http://debtcamel.co.uk/dro-income-up/

First , you will need to inform the Official receiver of your change in [financial?] circumstances.

The OR will then decide whether to revoke the DRO [or not]!

If revoked, you will be placed back where you were prior to seeking the DRO.

[In a DRO, no payments are made to the OR [aside from the fees], unlike in BR {IPA/IPO}]

You will then have to negotiate with your creditors, who may or may not add interest.

See the links above for a plain language view.

wba31

To further what has been said by alistairq;

If you have had a change in circumstances that now means you feel you are able to pay off the debts, you are obliged to inform the DRO Unit. You should also discuss this with the advisor that completed your DRO for you, as they may help you with the next steps.
If you have more than £50 surplus, your DRO will be revoked, however because your debts have not been paid your credit report will already be affected.
Creditors can add interest and charges onto the debt throughout the moratorium period, so that may well have been happening since March.
Your payments would need to be directly to the creditors, so there will be no singular payment. And unless you can make contractual payments you will need to either negotiate with the creditors or look to see if you can set up a repayment plan.

You may find however that you could remain under £50 and continue the DRO and let it clear your debts in March for you. Whatever you decide I think the best advice we could offer is that you need to talk to the advisor that did your DRO for you

gethinoakes

Thanks guys.

wba31, so are you saying the DRO would still be on my credit rating for 6 years if I terminate it and pay off my debts? Seems pretty pointless in paying them off if that's the case!

debt_doctor

gethinoakes wrote: »

Thanks guys.

wba31, so are you saying the DRO would still be on my credit rating for 6 years if I terminate it and pay off my debts? Seems pretty pointless in paying them off if that's the case!

Hi, yes the case is as you describe in this post and as wba31 and Alastair describe.
Your DRO will remain on your credit file for 6 years from when it was approved, just like each individual credit default will remain also. Unlike bankruptcy, there is no process of 'annulment' in which you can pay off all debts and costs and remove the bankruptcy.


DD

gethinoakes

debt_doctor wrote: »

Hi, yes the case is as you describe in this post and as wba31 and Alastair describe.
Your DRO will remain on your credit file for 6 years from when it was approved, just like each individual credit default will remain also. Unlike bankruptcy, there is no process of 'annulment' in which you can pay off all debts and costs and remove the bankruptcy.


DD

so is there any benefit at all to me for terminating the DRO and paying off my debts? Seems a bit silly that my credit rating wouldn't improve from doing it.

alastairq

Hi..you mention :-

I have a DRO that's due to end March 2015, but I want to start paying off the debts because I am now in a position to do so

Is the new position because you have an increase in earnings?

If so, the OR will need informing, and they will decide whether to revoke the DRO [placing back to square one] or not.

It is to be hoped the OR decides, if that is the case, not to revoke the DRO, but to allow it to continue full term.

This would be the best outcome for you.

In any event, your credit files will not be the best, but are not irreparable [as many who have a Bankruptcy petition behind them, have now discovered?}!

In practice, once the various entries are sorted and corrected, if needs be....then you can set about recovering your excellent credit score.

[Which really is a pretty meaningless thing]...

In any event, it is my view that you are better off leaving the DRO to run its course....[it costs nothing].....there are, in practice, few disadvantages to having insolvency on one's records....few indeed.

wba31

Again, I second what Alastair has said, if this desire to pay has come from an improvement in circumstances, you need to talk to your debt advisor and notify the DRO Unit.
If your circs are unchanged and you were planning on cutting back, don't bother, let the DRO finish and then look to repair your credit score if it means that much to you

gethinoakes

Ok thanks guys, My change in circumstances is a temporary one to be honest so its probably not a good idea me terminating the DRO as I would probably then end up in a position where I couldn't pay my debts again. I'll leave it be and work on my credit score in the meantime.

Thanks for all the advice.