DMP or DRO? It's too hard to decide.

prettyparanoia

I really can't decide if I should stay on my DMP or get a DRO.

I have £7500 debt and I am only paying £25, so doing the math I will be paying it off for a very, very long time.

But then if I get a DRO, sure all my debt will be cleared and I can start over, but my credit score will be shocked for 6 years, and if my landlord wants me to move out I will be entirely screwed.

Any advice or suggestions are welcome. 

EssexHebridean

Have you explored whether all the debt is actually enforceable, ie done CCA requests? Has everything defaulted? And have you put together your SOA (Statement Of Affairs) - if so a god starting point might be to post it here. 

Don’t worry about your “credit score” too much - either route is going to leave your history looking fairly shaky for a while, for sure, but right now the key thing is to find the right path for you to sort out your immediate situation. 

MalMonroe

Citizens Advice have a lot of info, such as here about DROs -

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/debt-relief-orders/debt-relief-orders-explained/debt-relief-orders-what-you-need-to-know/

and then you can just link to DMP to see what it says about those.

But you'd probably be better off just phoning one of the advisors either at Citizens Advice or my favourite, StepChange. I had a DRO a few years ago through StepChange and they were brilliant. 

Link here - https://www.stepchange.org/

An advisor can talk through all your options and they're very kind and non-judgemental, then they help you to reach a decision about what exactly is the best course of action for you.

fatbelly

I think the question is: Is there a good reason not to do a DRO?

Your file will have defaults on it already but they will be some way along to dropping off. A DRO will create a fresh mark which may or may not have an influence if you have to move in the private rented sector.

A DRO costs £90 and most complete successfully 

On the other hand you could be paying £25 per month for 300 months. 

I think I'd do a DRO and the start saving the £25 per month into a regular savings account

prettyparanoia

EssexHebridean said:

Have you explored whether all the debt is actually enforceable, ie done CCA requests? Has everything defaulted? And have you put together your SOA (Statement Of Affairs) - if so a god starting point might be to post it here. 

Don’t worry about your “credit score” too much - either route is going to leave your history looking fairly shaky for a while, for sure, but right now the key thing is to find the right path for you to sort out your immediate situation. 

I get that they will both make my score a bit rubbish but surely the DRO is 10x worse? If it's a minor difference then I'll definitely go for the DRO as it's the only thing stopping me.

Only issue would be if my landlord wants me out after my contract because I don't know how I'd get a flat. 

prettyparanoia

MalMonroe said:

Citizens Advice have a lot of info, such as here about DROs -


and then you can just link to DMP to see what it says about those.

But you'd probably be better off just phoning one of the advisors either at Citizens Advice or my favourite, StepChange. I had a DRO a few years ago through StepChange and they were brilliant. 

Link here -

An advisor can talk through all your options and they're very kind and non-judgemental, then they help you to reach a decision about what exactly is the best course of action for you.

Yes StepChange are the ones I have my DMP with and they are absolutely fantastic. I feel like they would rather me go on a DRO/ they see it as the better option, I was just scared because of the whole 6 years thing.

How have you found it affected your credit score and life in general? Do you regret going down the DRO route?

prettyparanoia

fatbelly said:

I think the question is: Is there a good reason not to do a DRO?

Your file will have defaults on it already but they will be some way along to dropping off. A DRO will create a fresh mark which may or may not have an influence if you have to move in the private rented sector.

A DRO costs £90 and most complete successfully 

On the other hand you could be paying £25 per month for 300 months. 

I think I'd do a DRO and the start saving the £25 per month into a regular savings account

I'm leaning towards this being the best option too. I'll be £25 better off a month, meaning I can save or get more financial stability. The year will go quick, and then I can stay debt free potentially forever. I could get a guarantor if I move again, I know my nan would sign it, and I mean these days you can still get credit card deals with poor credit rating and things like mobile phone contracts well I'll just have to save and buy but it all works out 

EssexHebridean

prettyparanoia said:

I'm leaning towards this being the best option too. I'll be £25 better off a month, meaning I can save or get more financial stability. The year will go quick, and then I can stay debt free potentially forever. I could get a guarantor if I move again, I know my nan would sign it, and I mean these days you can still get credit card deals with poor credit rating and things like mobile phone contracts well I'll just have to save and buy but it all works out 

OK - Houston, we have a problem... 

You need to rethink things here - at this point in time you don't even want to be thinking about the idea of getting further credit - and it concerns me that you are as should you run yourself into debt again it may not be so easy to sort out. Your entire focus right now needs to be on establishing what lead to the debt you have now in the first place unless it is as a result of something like splitting with  an ex and them leaving you with debts, or illness making you unable to work, for example. Then learning to budget, and live within that budget, saving an emergency fund that means you will not need a credit card "just in case", planning ahead financially for things like car maintenance, Christmas expenses and holidays, and starting to build a savings pot outside of those EF savings as well. This is where the SOA comes in - it means you have all your outgoings set out in one place, and particularly if you share it here others can add their experience to help you work through where your money might be better spent, and if there are any gaps you've missed in your budget that may trip you up down the line. 

Your next few years, until those defaults drop off, and the DRO if you decide on it, need to be spent ensuring that your credit history stays as squeaky clean as possible - at some stage careful use of a CC might be part of the plan, but in the first instance, while the only cards you will get will be those that scream "bad risk" at any financial institution looking at your history, that doesn't want to be part of the plan. 

capuchin

@EssexHebridean It MAY be that he simply wants credit cards for S75 protection etc, which is fair enough! I am already missing my Amex charge card myself though I still have CCs. (Though not the £400 annual fee!!!)

That said you're of course right with everything you say, and additionally I'd be wary of having my family guarantor stuff for me and dragging them into my affairs.

@prettyparanoia A DRO in your case seems to me like a no brainer. You currently don't WANT credit anyway and you don't want to be paying debt that you don't need to if you don't have ethical concerns (which you clearly don't). You shouldn't see this as an easy out though. You should do as above as EH says, and start building pots and funds for a more sustainable future.

Take responsibility and accept you need to change things would be my #1 tip to myself and you.

EssexHebridean

capuchin said:

@EssexHebridean It MAY be that he simply wants credit cards for S75 protection etc, which is fair enough! I am already missing my Amex charge card myself though I still have CCs. (Though not the £400 annual fee!!!)

That's a fair point, but for someone in the OP's position right now I'd be more inclined to suggest that they ask a family member to put the purchase on a CC for them to gain the protection, and they then transfer the funds to clear the transaction over immediately to cover it. The problem is, that it's all to easy once a card is in use to think "I'll just give myself a bit of breathing space this month because it's Christmas/My birthday/I have a weekend away with friends planned" and then before you know where you are, the minimum payment is back above a level that can be easily afforded - and that applies all the more when someone is in the position the OP is of having such a tiny amount of disposable income.

Your final sentence (not included in the quote) is absolutely spot on.