DRO and paying off existing loan

lifeoflearning

Hi all,

Thanks so much for the information I have gleamed from you all so far! I started talking about this plan on a different thread of mine but for the sake of keeping things separate I thought I would post here and see whether this is a viable plan.

BACK-STORY - I have old debts going back 10 years and a current loan that I am fully up to date with. The old debts have now all been sold on so none are with the OC. Three of the Assignees have tried to begin legal action with the PAP process. One wrote back and admitted that they didn't have the paperwork and so it was unenforceable (not to mention the fact that it is a merged overdraft and credit card debt, which I believe cannot be enforced given that they are governed by different regulations). Another ignored my request with the usual "we will put your account on hold until we receive the documents" line; a couple weeks later I had a letter to say that it had been assigned to someone else. Another Assignee do seem to have a decent case and I am likely to receive a CCJ for that one. I mentioned that all of the old debts have been sold on........actually that may not be strictly true as one I have absolutely no idea who holds it now, although I would imagine it to have been sold on by now.

I live in a house in the sole name of my wife, so am not a home-owner, I have no income and no assets, so it would seem as though a DRO would suit me best here; if I am going to get a CCJ that will ruin my credit history for another 6 years then I might as well go the whole 9 yards and deal with all the debt! The only issue here (I say only but it is quite a large one!) is that with my current loan I am over the £20k threshold! Even without the current loan, I am marginally over, although this is not an issue as I understand that unenforceable debts do not get included in a DRO; I would therefore be able to omit the debt where the Assignee wrote back confirming that they could not enforce the debt. So this just leaves me with the issue of my current loan.

Up until a couple of months ago, I was paying the existing loan but my wife has taken over this task for the time being. She has said that she will pay off the loan to enable me to fully qualify for a DRO. Now, as I understand from the previous thread I posted on, normal contractual payments cannot be viewed as me giving preferential payments. Also, as I now understand, if someone other than myself were to pay off the loan, it could not be a preference as I was not the one making the payment.

So, to summarise:

• House not in my name (never has been)
• No income
• No assets
• Debts under £20k once unenforceable debt is left off and existing loan is cleared

Looks good for a DRO to me, am I correct or is there anything that I am missing??!!

Any ideas much appreciated!

fatbelly

Yes, that seems OK.

In summary, debts barred by limitation or otherwise unenforceable, do not need to be included as qualifying debts for the purposes of a DRO and if they are not listed will not count towards the £20,000 debt limit.

lifeoflearning

Thanks fatbelly.

Where is best to go and discuss this with someone in order to make an application? I know that CAB, SC, NDL are the usual people to go to, but out of those, who would be best. Of course, I'm looking for an intermediary that is open to hearing my situation. I was talking online to a CAB debt adviser today and she didn't seem to have much understanding relating to what I was asking other than the basic criteria. I was trying to explain that as it stands, I don't quite qualify, but if I do XYZ, I would, and it was very difficult to get her to see what I was saying.

fatbelly

When the existing loan is paid so that the enforceable debt is under 20k, try to get a face-to-face with an Approved Intermediary at your local CAB. If you chat online you do not know how specialised the adviser is.

I wouldn't discuss tactics with them beforehand - just tell them what the situation is.

lifeoflearning

Ok thanks, good idea.

Can I just ask.......there seems to be this thing written in all the DRO guidance about preferential payments within the last 2 years. However, the IS Technical Manual, which I assume is what the OR will be following, states that this applies only to payments made to connected parties (family, friends etc). If making a preferential payment to a non-connected party, the limit is 6 months. Why is this differentiation not explicitly made when talking about DROs?

fatbelly

It's not an exact science:

Preference

A DRO application could be affected if, within 2 years of the DRO application, the debtor has made payments to one or more creditors in preference to other creditors. It is not possible to state precisely what might fall into this category, as any preference will depend on the facts and determined on a case by case basis.

In reaching a decision on whether to approve or decline a DRO application, the Official Receiver will have to consider the amount of the payment, whether it would have altered the financial position had it not happened, consider the timing and the reason behind the payment.

Where funds are deducted from benefit or wages as an Attachment of Earnings Order to one creditor payments will not be classed as a preference.

lifeoflearning

Ok thanks. So on the application form, it will ask if I have made any preferential payments, "yes" or "no". If they are made from someone else's account, I simply say "no"? Or "yes, but XYZ.....". Is it a case that so long as there is no payment leaving my account then I'm covered? I guess then that it would be classed as a gift from whoever paid it.......are there any rules about gifts when going for a DRO? Also, when asked about my living situation, there is never a category for "living in house owned by wife"!! Would I simply put "renting"?

fatbelly

If you didn't make the payment it's a simple 'no'

A third party can do what it likes with its money.

You are right - there are more categories of housing situation than on the form. If you own property you tick owner. Anything else goes in rented.

lifeoflearning

Thanks for all your advice on this! I guess all I need to do now is get the ball rolling! I will update when I have more progress!

lifeoflearning

Just a quick one regarding DROs. If during the moratorium it gets revoked for any reason, does the fact that you included a debt on the DRO count as an admission of the debt and thus restart any time accrued towards statute barred status? Currently have 2.5 years left until they become statute barred.

ToxtethO'Grady

I think you are overthinking this.


Get your DRO done and then see what happens it'll only be revoked if you have a change in your circumstances. Such as your surplus increases above £50 per month or you come in to assets worth more than £1,000 - you can pretty much have an asset/windfall up to £1,850 before they'd consider revoking a DRO. Even then either yourself or someone else has to make the Insolvency Service aware of your change in circumstances they don't usually chase people on a DRO unless information comes to light (someone grasses you up!).



If the scenario you described happened you'd need legal advice to dispute your acknowledgment of the debt by including it in a DRO.