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DRO ... for self employed, much difference?

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maxmycardagain
maxmycardagain Posts: 5,776 Forumite
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edited 16 October 2021 at 4:31PM in Bankruptcy & living with it
Anyone know what info the IS (or agency) require for a self employed person applying for a DRO?

Also, does a DRO mean closing all bank accounts?

cheers 
Now we all know how it felt to play in the band on the Titanic...
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  • sourcrates
    sourcrates Posts: 29,374 Ambassador
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    edited 16 October 2021 at 5:32PM
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    You can remain as a sole trader with a DRO, but its not an option if you are a company director.

    You are also subject to the £75 disposable income threshold, and the ban on taking more than £500 in credit.

    Your income is worked out on your previous years figures, so if your income fluctuates, it can be a problem, your DRO may be revoked if you go over the limits, it may not be the best option here.

    You only include debts, not every account is a debt, if the bank account is not in debt, then it will not form part of your DRO.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • maxmycardagain
    maxmycardagain Posts: 5,776 Forumite
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    edited 16 October 2021 at 8:46PM
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    You can remain as a sole trader with a DRO, but its not an option if you are a company director.

    You are also subject to the £75 disposable income threshold, and the ban on taking more than £500 in credit.

    Your income is worked out on your previous years figures, so if your income fluctuates, it can be a problem, your DRO may be revoked if you go over the limits, it may not be the best option here.

    You only include debts, not every account is a debt, if the bank account is not in debt, then it will not form part of your DRO.

    Ive told the guy he should consider ceasing to trade, more trouble than its worth TBH now, although he has had all 5 SEISS grants
    Now we all know how it felt to play in the band on the Titanic...
  • maxmycardagain
    maxmycardagain Posts: 5,776 Forumite
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    edited 17 October 2021 at 2:16PM
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    so under £75/week spare the IS wont impose a payment plan ?

    where can i tell the guy to look for advice on what`s allowed?

    cheers
    Now we all know how it felt to play in the band on the Titanic...
  • sourcrates
    sourcrates Posts: 29,374 Ambassador
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    edited 17 October 2021 at 2:16PM
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    so under £75/week spare the IS wont impose a payment plan ?

    where can i tell the guy to look for advice on what`s allowed?

    cheers
    You are referring to a Debt Relief Order.

    £75 is the monthly disposable income threshold, above which a DRO would not be granted.

    Nothing to do with making payments, as you do not make any payments during a DRO.

    I think your confusing this with Bankruptcy, where the IS may look to making an IPA (Income Payment Arrangement) if you have more than £20 monthly disposable income.

    You should refer them to Business Debtline.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • maxmycardagain
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    so under £75/week spare the IS wont impose a payment plan ?

    where can i tell the guy to look for advice on what`s allowed?

    cheers
    You are referring to a Debt Relief Order.

    £75 is the monthly disposable income threshold, above which a DRO would not be granted.

    Nothing to do with making payments, as you do not make any payments during a DRO.

    I think your confusing this with Bankruptcy, where the IS may look to making an IPA (Income Payment Arrangement) if you have more than £20 monthly disposable income.

    You should refer them to Business Debtline.
    OK thanks

    where can he find details of what he can put as living costs for income/outgoings?
    Now we all know how it felt to play in the band on the Titanic...
  • sourcrates
    sourcrates Posts: 29,374 Ambassador
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    There will be limits, but we are not privy to them, everyone's budget is individual, and unique to them.

    You must have £75 or less left after essential bills are paid, not including debt repayments, otherwise you do not qualify.

    Information can be found on intermediary sites such as stepchange and CAB.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • maxmycardagain
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    So, someone who has been self employed in the last 2 years but isnt at the time of application...

    do they use stepchange or the business debt version?
    Now we all know how it felt to play in the band on the Titanic...
  • maxmycardagain
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    JCS1 said:
    I appreciate that, but as a recent ex-business which version should he use?
    Now we all know how it felt to play in the band on the Titanic...
  • maxmycardagain
    maxmycardagain Posts: 5,776 Forumite
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    edited 23 October 2021 at 10:55AM
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    On the subject of a SOA for a DRO - how does the IS apportion a couples costs per month vs 1 applicants income?

    In this case the outgoings (very basic) are £1000/ month with only the applicants £950 pension coming in

    (allowing £350/month for food for 2 )


    Now we all know how it felt to play in the band on the Titanic...
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