Would I get a DRO?

Three7six

Hi everyone, newbie here, been reading posts but still a few things I don't understand.
I have 3 debts, a loan and 2 credit cards, I also have another credit card with a zero balance.
I've been paying them and so far haven't missed a payment. I've also been living with a friend however so no rent or anything to pay, and have, unexpectedly, been allocated a social housing property.
My income is made up of:
DLA higher rate mobility - which goes on a motability car
DLA middle rate care
Carer's Allowance
Income Support

Setting up home from scratch is obviously expensive and now, with bills and everything to pay there is no way I can afford to keep making payments.
I did have sofas on HP from DFS but a friend paid the balance off for me a couple of months ago and she has them now. Does that affect anything?
Is DLA taken into account for normal expenditure because a lot of it goes on things that might be classed as unnecessary but my disability prevents me from doing some stuff so I have to pay more.
I've been told my electric will be £50 a month and water £20 a month etc, but haven't paid it yet so can I include it?
My benefits are paid into a Barclays account and one of my debts is a Barclaycard, would I need to change them? I do have a Lloyds account that I put my 'spendable' money in so would it be better to change them to there?
Sorry, loads of questions, just panicking enough about the moving thing, let alone all this

Three7six

Debts are total of £13500 ish

Expenditure is around
Food, toiletries etc £240
Petrol £80
Electric £50
Water £20
Council tax £40
Hair cut £10
Clothes / bedding £30
Art stuff £15
Gifts £15
Mobile £38.50
Landline / broadband £30
Contents insurance £7
Pet insurance £18.20
Pet food £15
Social Fund repayments £33.48
Amazon music £7.99
Motability car £258.92
Disability related expenses £200



Income is
DLA (M) £258.92
DLA (C) £ 248.30
CA £279.93
IS £338.22

= £1125.37

Also I'll receive Housing benefit which is paid directly to my landlord so do I count this as income and expenditure?
Are disability related expenses allowed?

Craig1981

at the end of the day, all your income is classed as income for DRO, including housing benefit. all expenditure will need to be looked at,
i dont believe you can include Social Fund payments, as this would be listed as a debt. if i'm wrong, someone im sure will correct me

so expenses are:
£875.41 (i assume all monthly) car insurance i assume all incl in your vehicle expenses)
Income as £1125.37

leaving you with £250 excess. you state that you have £200 mobility related expenses - this would need to be approved by someone as cant advise on it. but, your water and electric usage seems on the lower side. Council tax if never paid before... where the figure coming from? IF in receipt of full HB, you should also get Council Tax Support (depending on the local authority, this could be up to 100%) most will charge a maximum of 20%. lets say the flat/house is band A, with single occupation discount and C/Tax support, you'd be looking around £20 a month you'd need to pay towards your council tax

for a DRO, you need less than £50 surplus income monthly - your income details... are the 4 weekly or monthly amounts? if they are 4 weekly, your MONTHLY amounts would look like this:

DLA (M) £258.92 £280.50
DLA (C) £ 248.30 £269.00
CA £279.93 £303.25
IS £338.22 £366.40
This would make your monthly income £1233

Three7six wrote: »

My benefits are paid into a Barclays account and one of my debts is a Barclaycard, would I need to change them? I do have a Lloyds account that I put my 'spendable' money in so would it be better to change them to there?

yes, i would change banks and make sure the bank you are using you do not have any debts with.

I would speak to Stepchange, Payplan or CAB regarding your application - they all charitable and will be able to better advise , especially on the expenditure side of things. Tell them you are living with friends and unsure of the realistic amounts it will take to run your own place.

£50 surplus is the magic number for a DRO, however there are also other options available if this one does not pan out - just make sure you using reputable charitable debt companies that will not charge you for their services.

hope all goes well

National_Debtline

Hi Three7six and welcome to the forum


It's all looking like you meet the DRO conditions, and from your figures I think you have already converted them to calendar monthly figures. You'll need to go use an intermediary to help you apply, you can usually do this through one of the free debt advice agencies. Just let them know that your friend took over the sofa payments and they'll advise you whether that could cause any issues, but don't worry about it at this stage.


You will need to declare the DLA and explain what you spend your care component on, but DLA is intended to pay for the extra costs associated with your illness or disability so usually there are no issues.


It's fine to include the electric and water. A DRO application will take some time to process so if you're moving soon you're very likely to find that you will have started paying those bills before the DRO starts.


You'll definitely need to stop banking with Barclays as you have a debt with them. It's fine to use your Lloyds account as long as you don't have debts with them or any bank they are linked to.


You can include the social fund loan repayments as the debt is not written off in a DRO so the payments are an allowable expense.


Don't worry too much whether you include the rent and Housing Benefit, the organisation you apply through will go over your statement of affairs again with you.


Best wishes


Susie
@natdebtline

fatbelly

I agree with Susie here.

Are your SF repayments not being taken direct from your IS? When is it due to be paid off?

Are you caring for someone else to get your Carers Allowance?

I agree your benefits mean you have a lot coming in but DLA does not have to be included as income so suspect you'll be OK to meet the criteria.

Three7six

Thanks everyone,
Fatbelly, my SF repayments are being taken directly, I just included them as I included the amount of my IS as the full amount before the deductions, I have about a year to go on those.
I am also a carer so get the CA, does that matter.
In people's opinions, is a DRO better than a bankruptcy?

Craig1981

Three7six wrote: »

In people's opinions, is a DRO better than a bankruptcy?

Both are still making you insolvent, and your credit file will be marked for the 6 year period, but i would say yes to the DRO over any other insolvency option, IF you qualify for it

I had to choose an IVA over bankruptcy and DRO due to my surplus income. That was making payments for 5 years, yearly income statements and reviews, increase in payments, additional payments when working overtime etc, and that was STILL the best thing i ever did!!

hope all goes well for you - make sure you using a charitable organisation to do the application. I used Payplan for a family member's DRO a few years back. Stepchange and CAB are the other two more recognised options

fatbelly

There are a number of advantages of a DRO over bankruptcy. including the lower fee.

If you can list your debts clearly (it seems you can) then you should be looking at a DRO.

You do have a lot of income and if the social fund loan payments finish within the 12-month period then your surplus rises £33.48.

However, on your figures your surplus is currently negative 32.02. This puts the whole of the DLA care in as both an income and an expense (as is allowed) and does not dispute or change any other figures.

I think you'll be OK

I would probably leave out the amazon music but it doesn't make any difference.