Dro??

dkd1987

where to start

My husband and I got into a hell of a lot of debt, some in my name and some in his, some joint. We currently have a DMP, been on it for about 2 years now, and the total balance is £36,295 at the moment, debt free by nov 2023!

Background - I do not work, have two children (age 6 and age 11 months). I live in my husband's house and get child tax credit of £120 per week and child benefit of £140 per month. At the moment my husband and I have separated and he is paying me £350 child support as well as his half of the DMP. I also get council tax benefit so I only pay my bills. We are working on getting back together but the debt is pretty much what caused the split.

INCOME: 1020

Dmp 200 (he currently pays the full payment so this is not included in the outgoings)
Water 40
Pet Insurance 6
Car Insurance 49.50
Car tax 12.68
Diesel 100
Gas/Elec 100 (100 in arrears)
Sky 75 (desperate to cancel but in long contract!)
School trips, packed lunches etc. 10
Food 400
Clothing 60
Hairdressing 25
TV licence 12
Car repairs 10
Emergencies 15
Pet food 10

so roughly at the end of the month I have about £40 or less depending on how many nappies I've had to buy, school shoes/uniform etc.

I braved my credit report and I have just under 20k of debt, including £5260 of joint debt.

I am wondering if I can get a DRO? This is extremely serious but this way I could clear my debts. Husband would then get a single DMP to clear his.

Few questions:

1. Will the creditors go after the house? It is in husband's name only. Worth about 125k max, with a current mortgage of 104k.
2. With regards to the joint debt - roughly half is with Natwest (overdrafts) and the rest HSBC (overdraft) - I understand they will chase my husband for the whole amount even though it's joint if I get a DRO?
3. My car's Parkers guide price is 3800, but you'd never think it (2006 audi a3, needs new turbo, laquer and bodywork a state, cracked windscreen, alloys scuffed to hell and back, etc.) should I get quotes from local garages as to the value? As I don't want my DRO rejected on this.

4. I have a credit card with capital one and one with halifax which are not on the DMP (total balance is 2000). I stupidly didn't think to include them as my dad has been giving me the cash to pay them. I have missed several payments on both and been over limit on both, but there have been times I made the minimum payment. Will this count as a preference?
5. I know they will ask to see bank statements, is this for every account I have? As my benefits go into one account and I spend from another?
6. Does it matter that my bank statement will show a lot of cash withdrawals? As I tend to withdraw cash for shopping rather than pay on card (helps me budget better) so the only things on my statement are bills really

sorry for all the questions, I just want to get it sorted, I know the debt is my fault but it is so depressing and I can't sleep at night through worry!!!

Husband is worried they will take the house off him even though the joint debt is only around 5k.

One creditor sent court papers to husband for a credit card (nationwide) and in order to prevent a charging order I had to get a relative to give me money to increase the payments to bring it down to 5 years repayment. Husband is now worried that this will jhappen to the joint debt.

Also - the lady who owns my old house (sold in 2012) said she had men in a white van pulling up demanding money last year, I only spoke to her recently but they demanded proof she was not me so I assume it's either HSBC or nationwide, as they updated my credit report to "gone away" - what on earth? I was already in a DMP?

National_Debtline

Hi dkd1987

dkd1987 wrote: »

Few questions:

1. Will the creditors go after the house? It is in husband's name only. Worth about 125k max, with a current mortgage of 104k.
Not as a direct result of a DRO in your name. See further below for more advice on debts and the house.
2. With regards to the joint debt - roughly half is with Natwest (overdrafts) and the rest HSBC (overdraft) - I understand they will chase my husband for the whole amount even though it's joint if I get a DRO?
You understand correctly. Your husband remains "jointly and severally" liable for these debts, meaning he can be pursued for the full balance.
3. My car's Parkers guide price is 3800, but you'd never think it (2006 audi a3, needs new turbo, laquer and bodywork a state, cracked windscreen, alloys scuffed to hell and back, etc.) should I get quotes from local garages as to the value? As I don't want my DRO rejected on this.
As you are probably aware, for DRO purposes your vehicle must be worth no more than £1,000. That is quite a gap from the Parkers valuation, despite the problems you list. If you can get some reliable quotes from local dealers that suggest a much lower true value, these can be accepted in place of the basic valuation.

4. I have a credit card with capital one and one with halifax which are not on the DMP (total balance is 2000). I stupidly didn't think to include them as my dad has been giving me the cash to pay them. I have missed several payments on both and been over limit on both, but there have been times I made the minimum payment. Will this count as a preference?
Any such payments made in the past two years will need to be declared as preferences as part of your DRO application. You will be warned that they could result in your application being rejected, but you can choose to submit it anyway on the understanding that the £90 fee is non-refundable. In practice, not every single payment that is technically a "preference" results in a DRO being rejected. It would depend for example on the size and timing of any such payments, and whether you were felt to have made them to deliberately put those creditors in a better position than others.
5. I know they will ask to see bank statements, is this for every account I have? As my benefits go into one account and I spend from another?
If you run your household through two bank accounts then yes, you would normally be expected to submit copies of both.
6. Does it matter that my bank statement will show a lot of cash withdrawals? As I tend to withdraw cash for shopping rather than pay on card (helps me budget better) so the only things on my statement are bills really
Not necessarily; as long as the withdrawals broadly match up with the spending reflected on your budget sheet, it shouldn't be a major issue.

sorry for all the questions, I just want to get it sorted, I know the debt is my fault but it is so depressing and I can't sleep at night through worry!!!

Husband is worried they will take the house off him even though the joint debt is only around 5k.

One creditor sent court papers to husband for a credit card (nationwide) and in order to prevent a charging order I had to get a relative to give me money to increase the payments to bring it down to 5 years repayment. Husband is now worried that this will jhappen to the joint debt.


Unsecured creditors like these ones are very unlikely to "go after the house". Yes, in some cases they may go to court and seek charging orders to give themselves some sort of security for their debt. However it is extremely unlikely that they would go beyond that and actually seek orders to force a sale - more than anything, while there are dependent children living there no judge is likely to approve such a request.

Also - the lady who owns my old house (sold in 2012) said she had men in a white van pulling up demanding money last year, I only spoke to her recently but they demanded proof she was not me so I assume it's either HSBC or nationwide, as they updated my credit report to "gone away" - what on earth? I was already in a DMP?
If these creditors are included in your DMP then I'm not sure what happened here, just a case of crossed wires perhaps. Anyway if necessary you could reassure her that they could take no action against her or her belongings.

Dennis
@natdebtline

wba31

dkd1987 wrote: »

1. Will the creditors go after the house? It is in husband's name only. Worth about 125k max, with a current mortgage of 104k.

The issue with the house is matrimonial beneficial interest. Even though you are not named on the property, because you are married to the homeowner the Insolvency Service would see this that you have an interest in this property. If it were in negative equity you could proceed with the DRO, but because of the equity the interest could stop a DRO being approved.

I have tried to find where i learnt this from (Insolvency Service email or in a newsletter) but i cannot find it to copy and paste

I would suggest you speak to the people who your DMP is with about best options to proceed

National_Debtline

wba31 wrote: »

The issue with the house is matrimonial beneficial interest. Even though you are not named on the property, because you are married to the homeowner the Insolvency Service would see this that you have an interest in this property. If it were in negative equity you could proceed with the DRO, but because of the equity the interest could stop a DRO being approved.

I have tried to find where i learnt this from (Insolvency Service email or in a newsletter) but i cannot find it to copy and paste

I would suggest you speak to the people who your DMP is with about best options to proceed

Hi wba


You are right to raise the prospect of a beneficial interest scuppering the OP's eligibility for a DRO - I probably should have addressed it in my response.


Where I am not sure I entirely agree is that it would be ignored if the house were in negative equity. It's academic in this particular case as there is £20K equity in the house, but my understanding from our discussions with the Insolvency Service in the past was that the gross value of the beneficial interest would be what counted, and not the actual level of equity, however odd that might seem. If you come across other information to the contrary, please do pass it on.


dkd1987


When considering whether you have a beneficial interest in the home (which would almost certainly rule out a DRO), we would have to consider a number of factors, such as whether you made any contribution towards the house deposit or any subsequent mortgage repayments - whether directly or via an enlarged contribution towards general household bills. This can be a complicated area, so as per wba's advice I suggest you speak to your DMP provider (assuming they do not charge you fees, in which case contact one of the free advice charities!)


Dennis
@natdebtline

wba31

National_Debtline wrote: »

Hi wba


You are right to raise the prospect of a beneficial interest scuppering the OP's eligibility for a DRO - I probably should have addressed it in my response.


Where I am not sure I entirely agree is that it would be ignored if the house were in negative equity. It's academic in this particular case as there is £20K equity in the house, but my understanding from our discussions with the Insolvency Service in the past was that the gross value of the beneficial interest would be what counted, and not the actual level of equity, however odd that might seem. If you come across other information to the contrary, please do pass it on.

Hi Dennis

I have received an email from the DRO Unit when this was queried stating that if the property is in negative equity, and the debtor is not named on the property, they can proceed with a DRO. However if the value of property changed so that it was in an equitable position during the moratorium period, the DRO could then be revoked.

In respects of matrimonial beneficial interest, the debtor's contribution to the property is irrelevant, the DRO Unit have confirmed to me that if someone is married to a homeowner they would deem there to be beneficial interest (why this differs to "partners" who may have the exact same set up i dont know!)

Ultimately in this case, having looked around the worst cases on autotrader i think the OP may struggle to prove the car is worth less than £1k. looking about online a new turbo seems to be possible for under £1k - which i know doesnt really help the OP at all.