Debt and renting help!

Welshie13

Hi all,
Im currently in £15k debt and paying £300 a month towards that debt via Stepchange however I am living with my parents and have a 3 year old son. It's got to the point where my son needs his own bedroom (I feel dreadful that he still doesn't have his own room) and my parents don't have a spare room as my brother also lives at home.
I need to look in to moving out and renting my own place however being in debt has made me feel slightly trapped.
Does anyone have any advice they could give me please in relation to moving out and having to lower my debt payment to around £100 a month. Would this be acceptable to my creditors? Would they then take a CCJ out against me because I would be lowering my payment by such a large amount. I'm beyond stressed at my situation and looking for some guidance please.

Thank you in advance.

Arleen

You should speak to stepchange about it, as I guess what you have is DMP and they are managing it for you so they will be in best position to advise.

fatbelly

These are non-priority debts and need not have much bearing on you moving forward with your life.

They will have an impact on your credit rating however and this will cause problems in private sector renting. Housing Association and Council places are in woefully short supply but I hope you are on the register.

You also need to start doing some sums. £300 will probably not be enough surplus to cover:

rent top-up (start looking at LHA rates)
council tax (if you're living in Wales that may not be so much of a problem as you have better government than England)
Gas
Electricity
Water
TV licence?
and you could easily have higher spend for travel, phones and food.

Having said that, the plan to move out, and clear your debts with a Debt Relief Order at a cost of £90, is a good one.

rockabillygirl

Hi, i didn't want to read and run. Please speak to your council housing department. It wouldn't be an immediate solution to your housing needs but would set wheels in motion to move forward.
Wishing you all the very best for the future.

National_Debtline

Hi Welshie13


Welcome to the forum. I think there are some really important points made by fatbelly. Covering your essential outgoings always comes before paying debts in a DMP, even if that means higher costs because you need to move. However can you afford to run your own home and stay in the DMP?


It is possible that you may be entitled to some benefits like housing benefit or universal credit to help cover some of the extra costs, check your entitlement here www.turn2us.org.uk. But if you will be left with little spare money you may want to consider a debt relief order as a way to get rid of your debts and get a fresh start. Good luck with it all.


Susie
@natdebtline

sourcrates

I`m guessing a DRO wasn't advised by stepchange previously as you didnt meet the £50 income surplus, but if you move into your own place, your budget will alter dramatically, and you may then qualify.

As said above, all unsecured credit debts are classed as non priority, i would crack on and try to find a place to live, your budget for debt repayment, is your income, minus your essential payments, equals whats left, that figure is then spread pro rata to your creditors.

Could be you will have less than £50 left over, which may qualify you for a DRO.

Welshie13

Thank you for your help.
One issue I have with a DRO is that I currently have a car on finance. My dad has offered to pay this off for me however it will then become my assett which will be worth more than £1000 and I need my car for my job. That is the main issue i have with a DRO however would probably qualify if it wasn't for that

fatbelly

HP is a bit of an oddity in DROs. If you are not in arrears with payments to the HP, you can exclude it from the DRO so that it does not appear as a debt (your intermediary needs to add a note as it will show up on the Experian report)

As the vehicle is worth more than £1k you would not be allowed to make payments to it. But a third party (your dad?) would, and the HP company wouldn't be bothered as long as they were being paid.

As long as the HP did not complete during the moratorium, then at no point would you be the owner of the car. This leaflet gives some explanation

Welshie13

fatbelly wrote: »

HP is a bit of an oddity in DROs. If you are not in arrears with payments to the HP, you can exclude it from the DRO so that it does not appear as a debt (your intermediary needs to add a note as it will show up on the Experian report)

As the vehicle is worth more than £1k you would not be allowed to make payments to it. But a third party (your dad?) would, and the HP company wouldn't be bothered as long as they were being paid.

As long as the HP did not complete during the moratorium, then at no point would you be the owner of the car. id=0B_0mcCBBECmcZ0R0OVdnaTdCeTQ"]This leaflet [/URL]gives some explanation

Hi Fatbelly,

My initial intention was to clear my HP however would I need to keep paying for it for 12 months after I start a DRO in order to keep the car but obviously my dad making the payments? Would I be able to give him the money but the payments come out off his account or would that be frowned upon? I don't want this to be the only thing that stops me getting a DRO. It's all so complicated to me but I also really need my own place. I will be defaulted on the 12th November by one of my creditors also so would that go against me in any way?

Sorry for all the questions.

fatbelly

OK, defaults are standard in the lead-up to a DRO.

The things that would stop you having a DRO are

• being the owner of a car worth over £1000 (as valued by Parkers Guide)
• having more than £50 per month surplus income as assessed by your intermediary or the DRO Team.

There's no tight monitoring on a DRO but obviously something is a bit odd if you have declared less than £50 surplus and then are giving your Dad >£100 per month to pay your HP

Have you actually valued your car on Parkers? (It's free, as long as you register an email address, even a fake one). It may be worth less than you think and may not cause a problem.

As that leaflet said, if the car is valued at less than £1000 then the payments are an allowable expense anyway.

Welshie13

fatbelly wrote: »

OK, defaults are standard in the lead-up to a DRO.

The things that would stop you having a DRO are

• being the owner of a car worth over £1000 (as valued by Parkers Guide)
• having more than £50 per month surplus income as assessed by your intermediary or the DRO Team.

There's no tight monitoring on a DRO but obviously something is a bit odd if you have declared less than £50 surplus and then are giving your Dad >£100 per month to pay your HP

Have you actually valued your car on Parkers? (It's free, as long as you register an email address, even a fake one). It may be worth less than you think and may not cause a problem.

As that leaflet said, if the car is valued at less than £1000 then the payments are an allowable expense anyway.

Thank you for the response.
Just valued my car on that website and it's worth £4500. Definitely out of the question for a DRO. Looks like I'm stuck at home for the foreseeable.