DRO Preferential Treatment?

alltaken

Hi all,

My Partner is looking at doing a DRO once her maternity pay from work ceases and she has less income. Once this happens she is worried her DRO would be rejected due to payments she has made to CCJ debts. Sometimes she has made agreements with these CCJ debts to pay X amount per month. During which she has not made payments to other creditors in the last 2 years.

Are CCJ's classed as more urgent debts and hence excluded from the preferential treatment part? Also bank charges for returned direct debits, are these preferential treatment?

Does a DRO use household income for the £50 and less rule or does it go by her expenditure only, i.e half the rent, water etc?

Thanks

fatbelly

Yes, a ccj is regarded as a priority debt because of the enforcement options that go with them.

I don't think that would be counted as a preference.

Her income is whatever she has in her name. She then takes a proportion of the household expenditure.

alltaken

Thank you. Household income. If based in joint tax credits is it half? Housing benefit in both names, half? Child benefit in my name half?

Outgoings, rent both names, half?

Energy bills just her name half or full?

Contribution from myself toward bills is listed?

If she is due to pay each creditor without a CCJ a £1 payment from the 1st NOV what would happen in say May, a creditor not on her credit report pops up during the DRO (let's say she makes 3 months of £1 payments to creditors other than CCJ debts) and claims preferential treatment what would happen?

If she pays for car insurance in full before the DRO would that be allowed? A car might not be allowed but would any money saved on listed expenditure, I.e shopping, be allowed to be used on fuel if she chooses? Not a big deal but she would like to maintain a car, is it possible if deemed not necessary?

alltaken

Oh also. What if she has paid differing monthly amounts to her CCJ debts? One CCJ may get 30, one 5

DorisTrousers

The intermediary concerned has a few options as to how income and expenditure is calculated, so I would not worry too much how the figure is arrived at as long as it is under £50. By all means ask the intermediary by what method it was arrived at though.

If a CCJ payment amount has been set by the court, then it doesn't matter if the amounts per month paid differ, and it is definitely not a preferential payment, so no worries there either. Bank charges are something she will have had no choice in, and are therefore similarly not preferential.

HappyMJ

alltaken wrote: »

Thank you. Household income. If based in joint tax credits is it half? Housing benefit in both names, half? Child benefit in my name half?

Outgoings, rent both names, half?

Energy bills just her name half or full?

Contribution from myself toward bills is listed?

If she is due to pay each creditor without a CCJ a £1 payment from the 1st NOV what would happen in say May, a creditor not on her credit report pops up during the DRO (let's say she makes 3 months of £1 payments to creditors other than CCJ debts) and claims preferential treatment what would happen?

If she pays for car insurance in full before the DRO would that be allowed? A car might not be allowed but would any money saved on listed expenditure, I.e shopping, be allowed to be used on fuel if she chooses? Not a big deal but she would like to maintain a car, is it possible if deemed not necessary?

Car insurance paid in full just before a DRO or Bankruptcy is fine. It's an essential bill to run a car and it's due annually. Same with (VED) road tax you can pay for 12 months of road tax just before a DRO or Bankruptcy.

The energy bills despite being just in her name are a household bill. She could include all the bills that are just in your name as household bills too.

Most of the time you have household income such as you have from benefits and tax credits. All of that must be put down. She'll have personal income from wages and salary all of which must be declared and she'll have a contribution from a partner towards bills. If partner earns less than the person taking out a DRO or Bankruptcy then you put the actual figure they earn down. If they earn more you put a figure that equals their own contribution to the household bills.

glentoran99

alltaken wrote: »

Hi all,

My Partner is looking at doing a DRO once her maternity pay from work ceases and she has less income. Once this happens she is worried her DRO would be rejected due to payments she has made to CCJ debts. Sometimes she has made agreements with these CCJ debts to pay X amount per month. During which she has not made payments to other creditors in the last 2 years.

Are CCJ's classed as more urgent debts and hence excluded from the preferential treatment part? Also bank charges for returned direct debits, are these preferential treatment?

Does a DRO use household income for the £50 and less rule or does it go by her expenditure only, i.e half the rent, water etc?

Thanks

is she not going back to work?

alltaken

She's unsure yet. Looking at her options. May I ask why?

alltaken

Thanks folks. The car would not be an essential expense hence the question asked. If she is not working and her use of the car is for food shopping, dropping and collecting child from 15 hours childcare.

Whilst a rejection could be made for travel costs on the DRO, could she use money saved on expenditure for food shopping for example?

The CCJ's were demanded in full, differing amounts of repayment monthly arranged with the creditor, not the court, after judgement and some months of ignoring the problems.

Stepchange advised her income should be stable for two months prior to a DRO application, is this essential?

glentoran99

alltaken wrote: »

She's unsure yet. Looking at her options. May I ask why?

because if she goes back to work she would be earning more and her financial situation would have changed after the 12 months so the debt wouldn't be written off

wba31

alltaken wrote: »

Thanks folks. The car would not be an essential expense hence the question asked. If she is not working and her use of the car is for food shopping, dropping and collecting child from 15 hours childcare.

Whilst a rejection could be made for travel costs on the DRO, could she use money saved on expenditure for food shopping for example?

The CCJ's were demanded in full, differing amounts of repayment monthly arranged with the creditor, not the court, after judgement and some months of ignoring the problems.

Stepchange advised her income should be stable for two months prior to a DRO application, is this essential?

Allowable expenses dont reach to car. If she has a car and pays to run it, and the car is worth less than £1k it will not be queried in the DRO. She may pay £20 a month insurance and £20 a month fuel, but it may be cheaper than £100 taxis so no issue. SO for that reason travel expenses are not queried unless they go over CFS figures.

If childcare is being paid for from her budget I would ask why, if she is not working?

If you are dealing with SC, ask to speak to their special DRO team, they will clarify all that needs to be done and how it will all work.