DRO. Going Self Employed & Mortgages

LBC2510

I’ve been going back and forth on this idea for years now and in those years my finances have got so much more out of control so here I am asking for your honest advice on what you think my best options are please.

I was making regular payments to all my debtors even though I was still accumulating more debt as I was making a pretty decent wage but April 2019 my housing situation changed and things started to get worse; then inSeptember 2019 I was made redundant. 

I’m currently unemployed so only get Universal Credit but have been training since September as I’m hoping to go self employed and potentially work part time to help me stay afloat.

I’m 29 now so I am panicking that if I get a DRO it will take 6 years before I can get on the property ladder (ideally mins and my partners plan was to get a mortgage within the next 3-4 years but he has no idea about my debt) but also know the banks won’t touch me unless I can pay off all of my debts (which are around £15k).

I’ve spoken with CAB and as a result I am currently making token payments to all my debtors of £1 per month but I also have a CCJ and a controlled goods agreement which. I know may not be covered under a DRO.

So my question is am I best to hold out and hope I make enough money to start paying these debts off or, is a DRO the best option for me so I can start a fresh?

If DRO is best, would this affect me becoming a Sole Trader? As becoming self employed is really my focus over working for another company at the moment.

Thank you I’m advance for any help you can provide me with

mwarby

A DRO sounds suitable to me

In terms of becoming a sole trader, getting a DRO won't stop this. I think it would stop you being a director of a limited company, but that's different to sole trader. The only difficulty I can see is that you need to have less than £50 disposable income, this is easy to demonstrate with payslips, but not so much as a sole trader. If your income rises above the £50 disposable threshold during the 12 months of the DRO, ghe DRO maybe revoked

Mortgage wise a DRO will be viewed in much the same way as bankruptcy. You'll find it near impossible to get a mortgage for around 3 years and it'll be 5-6 until the market really opens up and you can get decent rates. Of course being debt free will help with the affordability aspect. The best thing you can do in terms of mortgages is to save as much of a deposit as you can, and try not to get into new persistent debt(using credit card is fine, when you can get, carrying a ever increasing balance on one is going to be a problem)

LBC2510

mwarby said:

A DRO sounds suitable to me

In terms of becoming a sole trader, getting a DRO won't stop this. I think it would stop you being a director of a limited company, but that's different to sole trader. The only difficulty I can see is that you need to have less than £50 disposable income, this is easy to demonstrate with payslips, but not so much as a sole trader. If your income rises above the £50 disposable threshold during the 12 months of the DRO, ghe DRO maybe revoked

Mortgage wise a DRO will be viewed in much the same way as bankruptcy. You'll find it near impossible to get a mortgage for around 3 years and it'll be 5-6 until the market really opens up and you can get decent rates. Of course being debt free will help with the affordability aspect. The best thing you can do in terms of mortgages is to save as much of a deposit as you can, and try not to get into new persistent debt(using credit card is fine, when you can get, carrying a ever increasing balance on one is going to be a problem)

Thank you so much for your advice, I’ll definitely look into future income once self-employed & DROs in more detail