Debt relief order help

bimmerboy

hi people,
new to the forum so ill start by saying hi
hope someone can help
im going under a DRO this week but have just been informed that i will be receiving compensation from an injury claim that has been going on years - bad timing eh!!
my question is , i have included all my official debts within the debt releif order but i still owe a lot of money to family.
i am due £5400 from my injury claim, i have no bank account so was going to use the money shop to cash it (i know ill lose a fair bit but needs must).

i know i have to report it to the official receiver which i plan to do but i was wondering if anyone knew if i used this money to pay off my debts to family,which wouldnt leave me a lot of the payout left, would the official receiver cancel my dro?

i know its a bit of a complex situation but citizens advice seem to think i will not even see the money,it will go straight to the insolvency service,even though the solicitors will be likely to send it direct to me. either way as long as i can be debt free in 12 months im happy,id just like to know the process/result

thanks in advance

fatbelly

bimmerboy wrote: »

hi people,
new to the forum so ill start by saying hi
hope someone can help
im going under a DRO this week but have just been informed that i will be receiving compensation from an injury claim that has been going on years - bad timing eh!!
my question is , i have included all my official debts within the debt releif order but i still owe a lot of money to family.
i am due £5400 from my injury claim, i have no bank account so was going to use the money shop to cash it (i know ill lose a fair bit but needs must).

i know i have to report it to the official receiver which i plan to do but i was wondering if anyone knew if i used this money to pay off my debts to family,which wouldnt leave me a lot of the payout left, would the official receiver cancel my dro?

i know its a bit of a complex situation but citizens advice seem to think i will not even see the money,it will go straight to the insolvency service,even though the solicitors will be likely to send it direct to me. either way as long as i can be debt free in 12 months im happy,id just like to know the process/result

thanks in advance

You must contact your intermediary immediately and ask them not to submit the DRO application if they have not already done so. If it has been submitted but not accepted yet (normally a 24-hour gap) they can abort it by contacting the pre-order team.

A lump sum of £5400 received during the moratorium period WILL cause the DRO to be revoked.

The lump sum comes to you, not the Insolvency Service, and the IS has no claim on it. The CAB is talking rubbish to suggest otherwise.

When you do a DRO (if you ever do) then you must declare all your debts - this includes those to individuals.

And in the run-up to a DRO (the 2 years preceding it) you must treat all creditors equally.

Sorry to be blunt but I am a DRO Intermediary and I would be ...er... concerned if you were one of my clients that I knew nothing of (a) the lump sum and (b) the family debts.

Please keep posting and let us know what happens.

Edit: Did you actually ask the CAB this question today and not get told this? Who's doing your DRO?

chanz4

Doesn't PI claims get shown against national insurance numbers these days

bimmerboy

How will the insolvency service know ive received this payment? Unfortunately the application was finalised yesterday and id rather carry on with it than stop as i have court bailiffs on my case
.do they record it against my nationl insurance or would the IS have any record of the payment made to me.or just take my word on it reporting it?
Im on other benefits too while I sort myself out so there is zero chance of me.hidingany of the the money
Its a little confusing to be honest
Im thinking im just going to have to hand it over.3years of fighting for compensationand 2 perforated discs and looks like im just going to lose it all

bimmerboy

Just to note it was cab I went through and was told I couldnt include family debts as they werent on my credit files

fermi

bimmerboy wrote: »

Just to note it was cab I went through and was told I couldnt include family debts as they werent on my credit files

Concerning that a CAB advisor and intermediary has told you such a load of nonsense, :eek:

thewhiteavenger

When you say 'the application was finalised yesterday' that may not be the same as 'the application was submitted yesterday' Even if it was submitted it may not be too late if you act quickly to stop it. Your DRO cannot survive you getting a lump sum of £5400, and it is likely to be discovered even if you tried to hide it (which to your credit you are not trying to do), so your DRO will be revoked.

The difference is that if the application is stopped now, it could possibly be made again later but if the DRO is revoked you cannot have another one for 6 years.

You will not be forced to do anything with the money. DROs are for those without assets so getting a lump sum (there's some discretion for small assets but I think this ends at £1750) in the 12 month DRO period just means that the dro fails and your debts come back.

If you stopped the application, then you could pay the lump sum pro-rata to your debts and would still qualify for a DRO if there were still debts remaining and your assets under £300, as you will have treated all creditors equally.

However, the lump sum is yours, you do not 'have to hand it over' and you can deal with the debts as you wish, particularly if the dro route becomes closed to you. You will be paying the court-related debts in full (if these are magistrate court fines they are excluded debts in DROs anyway) and will probably want to settle the family debts likewise but the other debts may be open to settle at a percentage. It's just that on a dro application there is a question 'have you preferred one creditor over another in the past 2 years'

DorisTrousers

Unlike other forms of insolvency where any payout for pain and suffering is basically exempt and loss of earnings is an asset/windfall, under a DRO the whole lot is an asset, so the DRO is a no go unless you want to take the chance of not declaring that you have received the payment, which isn't a risk I would take personally.

National_Debtline

Hi Bimmerboy

bimmerboy wrote: »

i am due £5400 from my injury claim

I would just like to clarify some of the confusion within this thread. There is some conflicting information about injury claims and assets as far as a DRO is concerned. It is our understanding that Personal Injury awards are not classed as an asset under a DRO, and therefore, receiving this money does not automatically cancel your DRO. The money that you are due to receive should be paid to you directly and not to your Official Receiver, it is your money. However, there are 2 main things that you need to be very careful of, when spending this money. Firstly, these awards can sometimes have an aspect of “financial loss” included within them. Financial loss is not an excluded asset from a DRO; therefore, if there is an element of financial loss included within your award, and that element exceeds the asset limit under a DRO (which potentially, and at the discretion of the Insolvency Service, is up to £1850), it is likely that your DRO would be revoked.

If your entire compensation award is classed as personal injury, you must be very careful how you spend it. For example, if you do pay any of this money to your family/ personal debts, it is very likely your DRO would be revoked. Also, if you purchase an asset that then exceeds the asset limit, such as a car, worth more than £1000, then the DRO would be revoked.

bimmerboy wrote: »

How will the insolvency service know ive received this payment?

A DRO is a legal form of insolvency and you are under a legal obligation to declare it. If you fail to do then this, this can result in some very serious consequences. Not just that your DRO could be revoked, but also, that the Official Receiver can consider potential criminal proceedings for more serious offences.

bimmerboy wrote: »

do they record it against my nationl insurance

Not to my knowledge, but you are still legally obliged to declare it as mentioned above.

bimmerboy wrote: »

am due £5400 from my injury claim, i have no bank account so was going to use the money shop to cash it (i know ill lose a fair bit but needs must).

When you do receive your compensation, be very careful of using an organisation, such as the Money Shop to cash it as they will normally charge high rates. You could consider opening a Basic Bank Account with any high street bank and then cashing your cheque there (normally for free), or potentially using a service with a lower commission rate, such as the post office.

Laura
@ natdebtline

bimmerboy

ok brilliant this seems to have cleared this up a lot, the official receiver filed it on the insolvency register today so im now officially under a DRO.

the claim is 100% damages as the insurers have refused to pay out for loss of earnings and any losses incurred. I will wait until i physically have the cheque and will contact the IS as to what is my best option for it.
it wont pay all of my debts off but it may go a good way to clearing most of them.
a big big thankyou to all who have contributed to my post

DorisTrousers

I have to disagree with National Debtline.

The DRO Unit have confirmed that it IS an asset (I spoke to them yesterday on this very subject for clarification as I believed also that pain and suffering compensation was likely to be exempt), whilst under other forms of Insolvency, e.g. IVA or Bankruptcy, then personal injury damages/compensation are NOT considered an asset/windfall.

The easiest thing to do, and I understand that conflicting advice isn't usually a good thing, is to talk to the DRO Unit yourself. You can do this, anonymously, by calling 01752 635 200, press option 2 and option 2 again. Certainly, though, this payout needs declaring.