DRO - is this a preferential payment? + other questions.

Squeaky_Kleen
Squeaky_Kleen Posts: 23 Forumite
Part of the Furniture 10 Posts Combo Breaker
edited 26 May 2023 at 3:39PM in IVA & DRO
So I'm in a situation where it looks to me like a DRO is my most sensible course of action.  I'm self-employed sole trader and I have a Bounce Back Loan (£19k), 2 credit cards (£3k and £2k)  and an overdraft (£1k).  I have less than £2k in assets (how is this verified btw do they do a home visit to check how nice your TV is..  I'm living at my Dad's house? Also how many months of bank statements do I need to supply?)  and not a home or car owner. 

Over the last 6 months I had a plan with one card for £14 a month and the other card settled for no payment for 6 months with a view to things hopefully being better after the 6 months (they aren't) . On the Bounce Back Loan I've been on one of the "Interest Only"  periods for the last 6 month.. around £30 a month.   Basically with each one I've paid the minimum they will accept.  Could this be considered preferential payment in any way  since BBL got £30, one card got £14 and one card got £0? 

Going forwards as these payment plans are ending... am I best just not paying any of them for a couple of months before applying for the DRO? Just cut all contact with them?

 
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Comments

  • sourcrates
    sourcrates Posts: 31,160 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    edited 26 May 2023 at 4:36PM
    From memory I believe it`s 3 months bank statements, you self certify your assets, and your bank statements should back that up, no one does a home visit, your £90 fee does not buy much of the Insolvency services time.

    You are best off treating all creditors equally, and that means you don`t pay any of them, so best to stop paying now, and in a couple of months start the process.

    You apply for a DRO via an intermediary, there has been a recent shake up in those who provide this service, the .Gov website can provide an up to date list here -

    How to get a Debt Relief Order (DRO) - GOV.UK (www.gov.uk)
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Squeaky_Kleen
    Squeaky_Kleen Posts: 23 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    edited 26 May 2023 at 4:42PM


    You are best off treating all creditors equally, and that means you don`t pay any of them, so best to stop paying now, and in a couple of months start the process.

    Is there any danger that if I wait 2-3 months of not paying them before starting the DRO process that they start bankruptcy proceedings against me in that time?
  • sourcrates
    sourcrates Posts: 31,160 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper


    You are best off treating all creditors equally, and that means you don`t pay any of them, so best to stop paying now, and in a couple of months start the process.

    Is there any danger that if I wait 2-3 months of not paying them before starting the DRO process that they start bankruptcy proceedings against me in that time?
    Bankruptcy proceedings ?????

    Where on earth did you get that from ?

    You`ve been reading far too many scare stories, no one makes anyone bankrupt for consumer debt, that`s why we have debt collectors.

    Your accounts would need to be subject to non payment for a good 3 months before the collection process kicked in, that would consist of letters and phone calls, this may go on for a few weeks, then your accounts may be passed to debt collectors, who will run through there selection of template letters with you, another 6-9 months, after which they may be sold on, ignored, written off, chased or any combination of the latter.

    But I can say with a degree of certainty they will not be pertitioning for your bankruptcy.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter


  • You are best off treating all creditors equally, and that means you don`t pay any of them, so best to stop paying now, and in a couple of months start the process.

    Is there any danger that if I wait 2-3 months of not paying them before starting the DRO process that they start bankruptcy proceedings against me in that time?
    Bankruptcy proceedings ?????

    Where on earth did you get that from ?

    You`ve been reading far too many scare stories, no one makes anyone bankrupt for consumer debt, that`s why we have debt collectors.

    Your accounts would need to be subject to non payment for a good 3 months before the collection process kicked in, that would consist of letters and phone calls, this may go on for a few weeks, then your accounts may be passed to debt collectors, who will run through there selection of template letters with you, another 6-9 months, after which they may be sold on, ignored, written off, chased or any combination of the latter.

    But I can say with a degree of certainty they will not be pertitioning for your bankruptcy.
    It's more the Bounce Back Loan that I thought they might try some swift & harsh action with. I've really no idea what happens if you just go a few months without paying it after you've used your "interest only" payment holidays up.  The news has done a good job of making anyone that cant pay it back feel like a fraudster.  As a sole trader I didn't have the easy escape route of the Ltd companies, so I guess I fear Sole Traders are the "easy meat" for the banks.
  • sourcrates
    sourcrates Posts: 31,160 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    The collection process is the same whoever you are, or whatever you may owe.

    You don`t need to worry about anything like that, its usually only HMRC that will use those kind of tactics, the rest of the world uses debt collectors.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter

  • The collection process is the same whoever you are, or whatever you may owe.

    You don`t need to worry about anything like that, its usually only HMRC that will use those kind of tactics, the rest of the world uses debt collectors.
    Thanks for clearing this up for me.  My next challenge for the DRO is showing that I contribute to the bills at my father's house. The bills are largely in his name.  What kind of evidence would suffice?
  • RAS
    RAS Posts: 35,018 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Presumably you transfer money to him each month, which will be evidenced by your bank statements?  
    If you've have not made a mistake, you've made nothing
  • RAS said:
    Presumably you transfer money to him each month, which will be evidenced by your bank statements?  
    Has been cash at times since we live together. However I can make a point of transferring to him over the next few months.  Either a lump sum, or itemised transfers.  Whatever will be better received in the DRO application.
  • ManyWays
    ManyWays Posts: 1,089 Forumite
    1,000 Posts Fifth Anniversary Name Dropper
    Talk to Business Debtline - they are the experts on bounce back loans and insolvency
  • Squeaky_Kleen
    Squeaky_Kleen Posts: 23 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    edited 8 June 2023 at 1:26AM
    I have an additional question. I have approx £680 monthly incomings and approx £650 allowable monthly outgoings.  My bank account is fluctuating between a balance of £500 and £1200 generally.  (This is a separate account to my overdrawn account which I've stopped using). Will this be acceptable?

    I'm keen to keep my £500 cushion in case of emergencies, but will they say I should have spent this £500 on my debts?
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