Applying for debt help with PayPlan, DRO rules clarification

stressedandindebt

Sorry just seen your reply

Thanks for letting me more info about bankruptcy, after reading around more and looking at various independent advice sites I've come to the conclusion that I will probably just need to arrange a bankruptcy for myself

Regarding my partner, she has PIP and has been assessed with limited capability to work by universal credit, so she isn't required to seek work due to her disabilities, how would we look into her getting debts written off?

ToxtethO'Grady

Er..PIP income is disregarded for insolvency so how has your partner ended up with a surplus? You could put all the PIP income as adult care costs as that's what it is for. In  a DRO or Bankruptcy they wouldn't question it usually. The 1 rare time I have seen it questioned in a BR was the care costs were nearly double the PIP amount and the OR just wanted proof of the care costs.

If you go BR then your partner just has to say that you are BR and then it will be based on her income and most joint bills would then be in her name as yours would be taken off them. You would be expected to contribute to the household though and the OR would allow that you just wouldn't be named on the bills.

I would try BDL for your advice as you're self-employed and your partner could try BDL with you or on her own NDL, Stepchange or Citizens Advice as I think Payplan are trying to get a DMP or IVA out of you both.

stressedandindebt

Thanks, she contacted NDL yesterday and they're not taking on new DROs unhelpfully so next she'll contact stepchange, she has already negated PIP in her budget for adult care costs and her UC has housing benefit for half the rent and we've calculated half the household bills for her budget which still left her with a £50ish excess (and PayPlan didn't allow some of her costs for being too high), her budget definitely wouldn't cover the entire household budget, and until the breathing space she'd been using a lot of her UC paying her minimum payments rather than being able to contribute to the household budget

Also looking into the debt and mental health form for her doctor to fill in, though not sure if that will help much, and her breathing space is over half way done now thanks to all the delays PayPlan caused so far so it's all getting very stressful trying to find out best options going forward 

ToxtethO'Grady

If she can get a DMHEF she can look at asking for the debts to written off. They'll usually want a financial statement verified by a debt adviser with that though, CAB would be best for looking at that. Other tip is to search your council website for Severe Mental Impairment exemption for council tax, form needs to be signed off by a GP, again CAB can help with that.

CAB do the most DRO's in the country, I know they're busy but they will make sure you get the best advice for both of you. Creditors can give informal holds after breathing space especially when medical evidence is presented and the DMHEF will help your partner get those.

It's a £75 surplus for a DRO in England and Wales and £50 in Northern Ireland - where are you based?

stressedandindebt

Thanks everybody, she's currently trying to apply for a DRO with stepchange, in the event that that isn't accepted and she has to go the bankruptcy route, how far would they look into her finances as someone who is entirely on benefits? She has been reckless with spending due to her mental health and she is constantly worried about having to justify some of her spending, the information we've seen about having an appointment with an official receiver has given her several panic attacks whenever she thinks about it, all I can find to reassure her is that the OR doesn't expect any money to be paid into a bankruptcy order if you're entirely on benefits 

ToxtethO'Grady

Glad to help. There's no 'financial audit' involved they go by the application and Debt Camel has a good webpage on it

My advice is for your wife to be honest, explain it pretty much as you've explained it, that it was to do with her mental health and if she can get evidence of that from a health professional it should be ok. It's called the 'debt narrative' in an IVA and it is a good way of putting it, why did you take out the debt, what happened that you couldn't pay, how have you tried to manage this, what advice have you got.

It's where there are discrepancies like large sums of money borrowed but no explanation on what it was spent on "we got a loan for £20K....." the OR will, understandably, want to know what that loan was spent on.

stressedandindebt

Ok, thanks for that explanation, I think the details about being interviewed by the OR and having to bring all your bank statements (with the assumption you'd have to justify and explain every single transaction?) is what has scared her the most, is that not required anymore or not if you're on benefits?

ToxtethO'Grady

The interview is over the phone and the case examiner will know it's stressful and will be looking for anything out of the normal payments associated with life. They are very understanding.

You can upload any statements etc on your application now. They will ask about bank accounts but it's not 'explain every transaction' it is out of the ordinary transactions...grocery shopping, travel, petrol etc are all 'expected' transactions.

Any large transfer of money would be questioned in bankruptcy, savings accounts for children set up just before going bankrupt and then large deposits into them, whereas if it is a long term thing, might ask about it but it can be proven the payments have been over time.

Hopefully your partner will get a DRO through Stepchange so won't have to go through bankruptcy. I know it is easier said than done but try not to think about BR until it is what your partner has to do.