Applying for a DRO

Martham_2 Forumite Posts: 2 Newbie
This is my first post and I’m sure this has been covered many times before so please accept my apologies.

I am trying to sort out my debt problems and take control back. I am working with Step Change and they have advised that a dro might be the best option. My problem is my figures for my debt are very close to the £20,000 mark so Step Change have advised I act as quickly as possible to get it in before any interest is added. I’m working off figures from my credit report but these don’t match exactly to the balances of some of my debt. My worry is if I submit and pay the £90 (not a lot but right now it is) and there has been anything added it will get rejected and I’m right back to square 1. I also had an over payment for housing benefit from a while back which I’ve been paying back (very slowly) does this have to be included as it doesn’t show on my credit report and I have a payment plan in place? Step change are aware of this as part of my debt. Can anyone advise what the process is for when the application is processed? Will they need to contact me at all or will they do further checks and what would this include?

Sorry for the lengthy message I just have nobody to discuss this with and want to do what is right to get out of this mess :(


  • fatbelly
    fatbelly Forumite Posts: 19,184
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    Yes, an HB overpayment is a qualifying debt and so needs to be included.

    When you're close to the 20k limit you do need to keep a precise track of what each balance is, and how the balances are changing.

    The critical day is the 'day of determination' which is a little tricky as it's not necessarily the day your intermediary hits the button - usually two working days later.

    If you are going to make a payment to bring the balance down you are supposed to treat everyone equally, which means calculating a pro-rata payment for each debt. However, a third party can do what it wants.

    Given that bankruptcy costs £680 and is less flexible than a DRO it's worth finding a way to stay under 20k.

    You're not counting any excluded debts are you? Because it's only qualifying debts that count to the total. So social fund loans, student loans, tv licence arrears, child maintenance arrears, criminal fines - don't count.
  • Martham_2
    Martham_2 Forumite Posts: 2 Newbie
    Thank you for your reply. When the dro application is received by the insolvency service is this the day of determination and will they at this point do another credit check or is there check a little different? If a third party were to make a payment on one of my accounts to bring this balance down how would I show that I have not made that payment for it to be classed as preferential? I’ve been in touch again with my creditors for up to date balances so I’ll chase those up today.
  • fatbelly
    fatbelly Forumite Posts: 19,184
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    They do a credit reference agency check (I believe they just use Experian at the moment though that may change) either on the day of the application or the day after. The DRO itself tends to be made after 2 working days.

    The fact that it's OK on the credit report isn't the end of the matter as many debts don't appear and it may well be that a creditor that does appear would have a legitimately higher balance than the figure on the report. So you need to keep an actual accurate record.

    You have to declare if you have made a preferential payment as part of the process - it's a yes/no question - so if someone else chose to make a payment to your account you would declare 'no'. That's as far as it would go.

    If you have more questions, keep asking. It's not a problem.
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