Managing Debt and Returning to Study

xt1

Hi,

I'm pretty sure this is the wrong area of the forum to post, but I'm unsure where else to get advice.

So as with many of us, I got into a bit of financial trouble when I was a bit younger. I currently owe about £10k across a couple of credit cards and have agreements with the creditors to pay it back with minimum interest. It currently takes a fair chunk from my already low wage but I've been keeping up payments and managing quite well for the last couple years.

Anyway, this is all great, but I want to go back to University and study a degree. If I return to study I will have to cut down the hours I work and I will just about have enough income to feed myself - let alone pay back debts. Do I have any options here?

Thanks in advance for any advice,
-M

StopIt

If you're going to be studying, have little income, no assets and debts of less than £20k, you may be eligible for a DRO.


Look at the Bankruptcy Board, there's a subsection for IVA/DRO and you'll find information there.

National_Debtline

Hi xt1 and welcome to MSE,

StopIt is right, there is a board about IVA and DRO’s that you may wish to look at, but you could also consider lowering your arrangements according to your new income. You could drop the payments down to as little as £1 per month if you need to until things improve. However, if this is going to be a long course, I can understand why you may consider trying to get the debts written off.

A Debt Relief Order (DRO) is a way to get the debts written off for people who owe less than £20,000 of debt, have less than £50pcm available for the debts and have less than £1000 worth of assets (plus you are allowed to have a car that is also worth up to £1000).

A DRO means that for 12 months you do not pay your debts, you would have restrictions placed on you during this time (known as a moratorium), and if after the 12 months you are in the same financial position (i.e. that you still have less than £50pcm for your debts), the debts are written off and you are no longer liable. It is a form of insolvency and can affect other things, such as some private tenancies, employments (within certain industries) and even immigration status. It costs a one off fee of £90, it is very damaging to your Credit Reference File and you must meet the rules for the full 12 months. Good luck,

Laura
@natdebtline

xt1

Hi Laura,


Thanks for your detailed reply. I'm really worried about the affects a DRO would have on me in the future. Ideally I would like to pay off the debts when I'm in a better position, which won't be until after the degree. My main concerns are repairing my credit history in the future, if I enact a DRO will I ever be able to fully recover a credit rating or will that black mark be against my name forever? Also with regards to immigration, does that mean I won't be able to emigrate to certain countries with a DRO against my name (I would like emigration to remain an option after my degree).


Regards,
-M

System

A DRO is probably going to come off your file a lot quicker than a long term arrangement to pay off the debt as it puts a line under it.

[Deleted User]

Are you sure you want to study for a degree ? Most aren't worth the paper they're printed on. Involves a lot of debt and time invested is considerable.

Windofchange

I went back to study as a mature student, and from the sounds of things we had a similar youth, although I never went under with the repayments - close but not quite.

Anyway, have you looked into what sort of access to student loans etc you would be eligible for? I'm not up to date with the latest position with loans and bursaries, but you can certainly borrow your tuition fees which would be some 9k per year, and then assuming you have no other issues you could borrow money ontop as a student loan for living costs. Not sure what this amounts to now, but I'm sure you could google it / go to the student loans company pages.

It would be far from ideal, but assuming you can live as it were without the loan, you could use the student loan to repay the debts. It would be at a much lower interest rate than a high street loan, though obviously would tie you into repayments for the next 30 years or until you can pay it off.

Which brings me to does doing this degree actually benefit you? The sort of debt that people are coming out of uni with at the moment is staggering. 3 x 9 grand a year is £27k to start with, then add to that any student loan you have taken out. It could well leave you £40 - £50k in debt at the end of three years. If it were me, I would be thinking extremely hard about the point of it all. If this is going to really further your career / life then fair enough, but if it is just an I haven't been to uni yet and want to experience it for a degree in media studies then I would be asking questions.

National_Debtline

Hi again,

xt1 wrote: »

Hi Laura,

Thanks for your detailed reply. I'm really worried about the affects a DRO would have on me in the future. Ideally I would like to pay off the debts when I'm in a better position, which won't be until after the degree. My main concerns are repairing my credit history in the future, if I enact a DRO will I ever be able to fully recover a credit rating or will that black mark be against my name forever? There will not be a black mark on your file forever (there are no such things as a black mark anyway). A DRO will show for 6 years from the start date. It is a legal form of insolvency, so will make obtaining credit during that 6 years difficult as your rating will be quite damaged. After the DRO comes off your file, it should be less of a problem, however, if you are asked whether you have ‘ever’ been insolvent before (on future credit applications) you would still have to declare it. Also with regards to immigration, does that mean I won't be able to emigrate to certain countries with a DRO against my name (I would like emigration to remain an option after my degree). You would need to check the emigration application criteria to find out if this is a problem. It is similar to going bankrupt so may affect your ability to emigrate to certain countries, but, unfortunately, I cannot say if that would only be for the 6 years that it shows on your credit report, or potentially longer.


Regards,
-M

Laura
@natdebtline

sourcrates

xt1 wrote: »

Thanks for your detailed reply. I'm really worried about the affects a DRO would have on me in the future. My main concerns are repairing my credit history in the future, if I enact a DRO will I ever be able to fully recover a credit rating or will that black mark be against my name forever?

No such thing as a black mark, debts are recorded on your file as to how you repay them, a DRO would lead to defaults, and would also appear in the public information section of your credit file.

The good news is that defaulted accounts are expunged from your file after 6 years, leaving no trace they were ever there, even with Bankruptcy, the effects only last for the same length of time (normally) after which a new start can be made.