Applying for debt help with PayPlan, DRO rules clarification

stressedandindebt

My partner and I both have our own debts and live together, we are currently individually working with PayPlan to find debt solutions as we have a complicated relationship and don't want to tie our finances together any more than we already have

The person dealing with my partner's case has been replying a lot more frequently than mine so she's further through the process and has most of her budget sorted, yesterday they said she needed at least £50 spare in her budget to get more options, as she had around £25 left before.

She has budgeted for her half of the bills and rent etc and seems to be eligible for a DRO based on the rules on Payplan's site and the gov site, regarding level of debt and amount available in her budget, but PayPlan have come back today and said that they would need a "full household budget" to consider her for DRO and that some of her expenses wouldn't be allowed.

Also her income is entirely benefits, not sure if that would effect what options she would have to clear debts.

Can anyone with experience of this process let me know whether PayPlan is correct to require a full household budget just because we live together currently? As she really doesn't want to be held to a longer basic debt management plan or go into bankruptcy.

sourcrates

Intermediaries usually work off household budgets, yes, simply because its easier to get an accurate picture of your income/expenditure that way.

How much debt do you each have ?

You should ideally have said you were single, and each of you gone with separate charities, just so much easier with less explaining to do.

stressedandindebt

I'm not sure how much more accurate we could be with our budgets if we did a joint one rather than separate, considering our very different incomes, and that's certainly a weird reason for not even considering a DRO for her.

I think my debt is over £50k and my partner's is just over £22k, so we were expecting to need different debt solutions for our different situations

Considering how slow PayPlan has been dealing with my side of things I'm tempted to look into someone else, the only other place I've contacted before is stepchange and they were seemingly unwilling to help due to me being self employed.

sourcrates

Yes if your self employed you need to use Business Debtline, as the debt charities won`t deal with the self employed, as different criteria apply.

If your not a homeowner, then bankruptcy may be the way to go with a 50k debt.

stressedandindebt

I'm not happy to have the consequences of bankruptcy, but thanks for the advice about business debtline

Back to my partner's issue, PayPlan replied to our last message to say that some of her budget would be cut out based on the guidelines for a DRO for her to qualify, they didn't specify what is not allowed though so will be getting them to give more details on that.

They are still insisting a DRO requires a join budget, I can't see anything about this on any of the official sites, do we have grounds to refuse that?

At this point it sounds like they only want to offer her a debt management plan which I believe means paying off all the debt which at £50 month would take 37 years, surely that's not reasonable?

Approaches a debt management firm was supposed to be solving each of our debt issues (which were exacerbated by the pandemic and my partner's disabilities) not make this more stressful and impossible

ToxtethO'Grady

Business Debtline can help you and your partner with the household budget taking into account your self-employment. If a DRO is the best option for your partner they will advise the best way to go about this. They are the sister organisation of National Debtline so they may pass it to their DRO Team or they may have their own team.

Part of a DRO application looks at any contributions other people, such as family members, make to your household expenses so when doing a sole budget and some expected costs are left out this leaves a query of how this is paid for. If you say 1 person is in the household and childrens costs are on the budget, when you have children and you don't get the child benefits - intermediary has to ask why? No energy costs because your partner pays as you pay the rent/mortgage etc it needs to be worked out what their contribution and yours is to the household.

I would cut your losses with PayPlan as it seems their DRO policy requires a household budget and apporach BDL together.

sourcrates

Honestly, this budget thing, is only required to get the DRO signed, sealed and delivered, she must have a surplus of £75 or less, and this only has to show the one time, in the budget submitted with your application, simply in order to get the arrangement approved.

It does not mean you both have to stick with that budget, what you actually do with your own money afterwards is up to you, once a DRO is approved, there are no follow up checks, no one looking at her spending etc, £90 does not buy much of the insolvency services time you see, its a one time only thing, a pre-requisite to get approved if you like.

stressedandindebt

Hi again, thanks for your replies so far

Payplan say they would have to adjust my partner's budget based on some secret "how much you are allowed to spend under a DRO" budget, which would take her a fair amount over the allowed £75 surplus, is there something published somewhere that states the allowed budget amounts for DROs so we can make sure she is claiming her share all the items we pay out and she is allowed to claim? Considering Payplan continue not to get back to me we would probably be shopping around for a different company, someone said upthread that approaching different companies could be possible, but we need to make sure that she'll be eligible if she wants to go the DRO route 

Otherwise it seems that bankruptcy is the only viable way to go (maybe for both of us?) though raising £380 each is going to be a big ask, but a 37 year debt management plan is even worse

stressedandindebt

Sorry typo, £680 each 

fatbelly

There are guidance figures as part of the Standard Financial Statement, but these are not published.

Bankruptcy is £680

sourcrates

To be honest, a normal, simple bankruptcy, is a quicker, more straightforward process than a DRO.

Although there are budgetary constraints, they are not applicable to the acceptance criteria.

Bankruptcies tend to be approved quite quickly, and as long as you are honest in your application, they have a very high acceptance rate.

As your partners income is entirely benefit based, there would be no IPA for her, 12 months until discharge, then the debts are wiped forever.

Yourself, if you have any disposable income over £20, then you will get an IPA, usually for 3 years.
Where bankruptcy is concerned, you are actually encouraged to over budget, so you don`t leave yourself short, if any of the categories look too beneficial to you, the OR would say something, and possibly get you to reduce it, but all that would be discussed in the initial phone meeting with the OR.

You can also pay your bankruptcy fee`s on a monthly basis, however it won`t be actioned until the full amount has been collected from you.

Going forward, for the average person, there is no real difference between having any of the insolvency solutions on your credit file, all have similar pro`s and con`s, all have similar effects on your ability to obtain credit, all will be gone after 6 years, its just a bankruptcy record remains with the London Gazette more or less for ever, and the other options don`t have that.

Also, if I may make a suggestion regarding your partner, as her income is all benefit based, these can be revoked or re-viewed at any time, which can make her income unreliable, does she have an illness or condition that stops her from working ?  if so, you have a good chance, on that basis, and the fact she doesn't work, of getting the debts written off.