DRO ... for self employed, much difference?

maxmycardagain

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 

sourcrates

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.

maxmycardagain

sourcrates said:

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

maxmycardagain

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

sourcrates

maxmycardagain said:

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.

maxmycardagain

sourcrates said:

maxmycardagain said:

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?

sourcrates

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.

maxmycardagain

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?

JCS1

If they are going for a DRO, they need to use an approved intermediary.

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/debt-relief-orders/getting-a-debt-relief-order/how-to-get-a-debt-relief-order/#:~:text=You can only apply for,DRO is right for you.

maxmycardagain

JCS1 said:

If they are going for a DRO, they need to use an approved intermediary.

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/debt-relief-orders/getting-a-debt-relief-order/how-to-get-a-debt-relief-order/#:~:text=You can only apply for,DRO is right for you.

I appreciate that, but as a recent ex-business which version should he use?

maxmycardagain

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 )