DRO and lease car

Golfhotel

Hi would really appreciate some advice please

if someone took out a lease car contract which was £2400 deposit and £230 per month, and does a dro, can they keep paying the car lease and keep the car?

say it was essential for work/life?

could that £240mnth be put down as essential outgoings?

fatbelly

It's not explicitly ruled out but the questions that have to be asked are

1. Is there a cheaper method?
2. When was the agreement taken out (for example, was it just before the DRO)?
3. How much is it in comparison to public transport?
4. Is everything that is being hired needed?

Golfhotel

fatbelly said:

It's not explicitly ruled out but the questions that have to be asked are

1. Is there a cheaper method?
2. When was the agreement taken out (for example, was it just before the DRO)?
3. How much is it in comparison to public transport?
4. Is everything that is being hired needed?

Thank you fat belly

so if this person applies for a DRO while leasing this car for about £200 month what will happen?

from what I hear nobody get turned down on expenses like this for a DRO?

but what if you did get turned down, could you just rearrange your numbers and apply again?

fatbelly

You have to apply through an Approved Intermediary.

It would be their decision whether that was a fair expense.

I don't know about nobody getting a DRO declined on surplus income grounds. The numbers are certainly low

https://debtcamel.co.uk/dro-applications-faqs/#How_many_DROs_are_rejected

The rules of re-application changed recently. Even if your DRO is revoked you can re-apply once you meet the criteria.

Following a recent County Court decision on how revoked DROs should be considered when determining a (further) DRO application within 6 years, the DRO Team have changed our process.

The Judge made the ruling on the basis that revoke meant ‘to cancel, nullify or rescind’, therefore the previous DRO did not exist.

For practical purposes, if a client has been subject to a DRO within the last 6 years that was revoked, they can apply for a (further) DRO as they did not receive the benefit of the original DRO as they remained responsible to repay their debts.

This does not mean that the application will automatically be approved as the DRO team will need to consider the reason for the revocation decision and when this took place in relation to the submission of the new application.

ToxtethO'Grady

If you answer the questions that fatbelly put that will give a better idea of the advice.

Expenses are not 'turned down' in a DRO the Insolvency Service will reject the DRO, the intermediary will put the application together and will discuss the lease agreement. They will want to save the debtor the £90 fee being wasted as it is non-refundable and will discuss if it is likely to be rejected.

If it was a lease it will never belong to them so could be classed as a rental agreement. This could push the household expenses above the SFS guidelines for the debtors family.

It can get complicated with vehicle lease/HP agreements as it may have a clause saying if the debtor goes insolvent the agreement is terminated, it usually only states it for BR but it is usually included in the agreement as an insolvency clause. The wording is important as if it says insolvency then the DRO is a form of that so the agreement could be terminated by the lease/HP company.

Is it definitely a lease agreement or hire purchase/conditonal sale or PCP?

Golfhotel

So the person has nothing to lose by trying the DRO application with an approved intermediary like stepchange or one of the others

you won’t risk £90 because you don’t have to pay that until the intermediary has said yes and isn’t it the case that it’s never or hardly ever turned down at that stage?

Even if it is turned down then with that update from fatbelly you can just apply again straight away and change a few things


about the small print in the lease car agreement well how would they know that you did a DRO? Only if you stopped paying the monthly fee then you could include that in the DRO as Well?

fatbelly

The devil's in the detail here. If the only way of getting under the £75 surplus criterion is by paying £200 per month for a lease, and the lease is deemed as not allowed, then the surplus is too great for a DRO.

But in general I would say it's always worth exploring the possibility of a DRO by discussing things with an Approved Intermediary. They are employed by the organisations that the insolvency service recognise as 'Competent Authorities' and the ones that do the bulk of DROs are Citizens Advice and Stepchange.

If the person doesn't qualify for a DRO then it's bankruptcy but the fee there is £680.

The numbers of applications declined and DROs revoked is not zero but it is low, around 1% each. You get the stats when the government does a consultation like they did in 2014. Obviously a lot of that document is out of date. Likewise, restriction orders for improper conduct are rare - just a handful per year.

Golfhotel

fatbelly said:

The devil's in the detail here. If the only way of getting under the £75 surplus criterion is by paying £200 per month for a lease, and the lease is deemed as not allowed, then the surplus is too great for a DRO.

But in general I would say it's always worth exploring the possibility of a DRO by discussing things with an Approved Intermediary. They are employed by the organisations that the insolvency service recognise as 'Competent Authorities' and the ones that do the bulk of DROs are Citizens Advice and Stepchange.

If the person doesn't qualify for a DRO then it's bankruptcy but the fee there is £680.

The numbers of applications declined and DROs revoked is not zero but it is low, around 1% each. You get the stats when the government does a consultation like Obviously a lot of that document is out of date. Likewise, restriction orders for improper conduct are rare - just a handful per year.

What if this hypothetical person says they need the car for work and life, there may be cheaper alternatives like public transportation but this may not be possible for work?

And what if they stopped paying the monthly lease car fee just before the application, would that then also be included in the DRO? I hear all debts if they are listed or not are then included?

fatbelly

In a DRO it is only the debts listed that are included, at the balance listed.

You're confusing it with bankruptcy where it is the person who goes bankrupt and any qualifying debts at the date of bankruptcy are covered, whether listed or not.

I can't answer the other questions. You need to run the actual situation past an actual intermediary if you want a DRO.

You can do a bankruptcy application yourself without taking advice, though that still might be a wise thing to do.

Golfhotel

fatbelly said:

In a DRO it is only the debts listed that are included, at the balance listed.

You're confusing it with bankruptcy where it is the person who goes bankrupt and any qualifying debts at the date of bankruptcy are covered, whether listed or not.

I can't answer the other questions. You need to run the actual situation past an actual intermediary if you want a DRO.

You can do a bankruptcy application yourself without taking advice, though that still might be a wise thing to do.

I’m sure I read some changed to Dro rules in last few years that it used to be only listed debts included.

but when the change from £20k to £30k came in there was also a change that all debts were included just like bankruptcy?

fatbelly

Wishful thinking, I'm afraid

I am an intermediary and not infallible. If you can find guidance to that effect I'd be delighted to see it.