DRO help

wayne0881

Hi All,


I've been considering applying for a DRO as I fit all the criteria and I don't want to go bankrupt if I can help it (I can't actually afford the £600 anyway)


My question is to anyone who has knowledge of the DRO process, My expenditure is about £20 after all bills, payment plans etc have been taken off my income - however the council tax arrears payment plan I have in place is £50 if that is one of the debts that gets wiped I then tecnically have a 'spare' £50 to go back into my budget thus taking me over the £50 thresh hold for DRO - would that then unqualify me for one or is it all based on my original £20 expenditure.


Thanks

sourcrates

Re-jig your budget, debt repayments are not included in the calculation, I’m sure your budget can be fettled to show a £50 or less deficit.

wayne0881

sourcrates wrote: »

Re-jig your budget, debt repayments are not included in the calculation, I’m sure your budget can be fettled to show a £50 or less deficit.

so it's just rent,bills that are calculated and debts are seperate - okay yes i'm sure I can change a few things to fit.

debtcaseworker2019

Debt repayments are taken into account in a DRO - you can only make payments of £50 or less.


You should not make repayments on any debts that are included in your DRO except rent arrears for the place you are currently staying.


The council tax will be included in the DRO so you wont be making monthly debt repayments just your ongoing repayments for your normal monthly council tax bill.


You didn't mention that your seeing an advice agency to get help doing a DRO - you are unable to do one yourself.


I would go to see your local Citizens Advice to do one for you - if your debts are under £20,000 you wont be looking at bankruptcy - you can also ask them to apply for a grant to help pay for whichever insolvency option ends up being best for you whether this is a DRO or bankruptcy.

sourcrates

debtcaseworker2019 wrote: »

Debt repayments are taken into account in a DRO - you can only make payments of £50 or less.
.

Most debt advice agencies, and the insolvency service guidance manual describe the £50 surplus rule, thus "you have less than £50 to spend each month, after paying tax, national insurance and normal household expenses".

You don`t include any debt repayments in that calculation, just household expenditure.

fatbelly

sourcrates wrote: »

Most debt advice agencies, and the insolvency service guidance manual describe the £50 surplus rule, thus "you have less than £50 to spend each month, after paying tax, national insurance and normal household expenses".

You don`t include any debt repayments in that calculation, just household expenditure.

This is correct.

It is misleading to say that 'Debt repayments are taken into account in a DRO ' but let's have a closer look at your council tax.

Council Tax

At the beginning of the financial year, the local authority issues a ‘demand notice’ for the full balance due. This demand notice is an estimate of the tax due and is based on an assumption the tax payer will be resident in the property for the whole of the period, will remain a tax payer and that the property will remain in the same council tax band. The demand notice sets out the payments the tax payer will be required to make over the course of the year on account of the council tax payable. This is usually 10 monthly instalment payments but can be 12 monthly instalments by request.

Any amount due and unpaid under the instalment agreement up to the date of the DRO being approved is a qualifying debt in the proceedings.

If the debtor’s council tax is up to date under the instalment agreement at the date of the DRO, no amount should be scheduled in the DRO application as any unpaid balance relates to future occupation of the dwelling.

Where instalment payments are in arrears and the debtor has defaulted on a reminder or final notice the whole of the remaining liability for the year becomes due and payable. In these circumstances the whole of the amount is due and payable and is a qualifying debt whether or not the council has obtained a liability order.

Where the council has obtained a liability order prior to the making of a DRO the whole debt as notified within the liability order is due and payable and should be treated as a qualifying debt.