Can I go from Breathing Space to a DRO?

mancity22

Long story short I've been burying my head in the sand and have been struggling to keep up with monthly payments. I get paid £2000 a month and most of it was used for paying back credit. After about a week I had no money left for anything else. I worked it all out and I am in around £28,000 debt. 

So thank God (and Martin Lewis) for MSE as I came across Debt Relief Orders which seem like a good option. My credit score is Very Poor anyway which I assume is due to the amount of credit I have, so it's not like I'm ruining a good score and I'd rather live a good quality of life without the stress and worry. 

I went through StepChange and worked out that without paying my debts I'd be left with around £50 a month so I would qualify for a DRO, so I started the process with Money Wellness. 

However I have a bit of an informal living arrangement right now as my partner has been taking care of rent etc... whilst I get back on my feet so I haven't got any payments on my statement for those bills. Another hurdle is that I work in the financial sector and whilst I don't think my employment contract mentions DRO's being a sackable offence I need to make sure that it won't affect my employment before I submit my application. 

In the meantime I panicked a little and submitted an application for Breathing Space and a Token Payment Plan whereby I will pay StepChange £22 a month and they divide it equally between all my creditors. I thought this might be good as an interim period as it will show I am treating all of them equally and it can be cancelled at anytime. 

I have opened a Nationwide account and have requested my salary be put into my new account as I have a large OD with my current account. My plan is to move my direct debit bills over and have my StepChange payment taken from there. I'm also going to send my partner my rent payment at the end of the month from this new account so I can submit the statement to Money Wellness. 

Now I'm wondering after a month of this and if my employer says a DRO won't affect my employment, is it possible to apply for a DRO whilst in breathing space / a TPP? I understand that it said you cannot apply for Breathing Space whilst on a DRO but it didn't mention the other way around. 

I also have some further questions.:

1. I didn't include my mobile phone contract payments in my TPP as I need my phone. Does this count as a debt and if so would it be seen as favouring one creditor over another if I don't stop paying them? Should I stop paying them or pay them a token payment like the other debts? My contract has a year left  so I am still paying back the handset. 
2. I have some items on hire purchase with Raylo such as a laptop and my partner's phone. Whilst it is a credit agreement I do not own these items however we do actually need them. Is it recommended that I send the items back? Or is there a possibility I can carry on with the payments as it's not a debt as such. 
3. Finally where do DRO's stand with Buy Now Pay Later services like Klarna? I have some short term Pay in 3 plans with them which will end soon anyway but also longer term 12 month plans. I did include them in my TPP however I don't think they work the same as a credit card / loan? Do I need to stop paying them to not appear as favouring them or is it okay? 

stu12345_2

if you live with a partner their wages will be taken into account for a split if household bills, eg food, water, gas, even if they are letting you pay nothing at moment.

cos the dro application will split the bills eg 50 50 based on similar wages or whatever the ratio maybe depending on who earns the most.

you will probably then find you have much more than the £75 max allowance left over( after paying normal bills) ( what you are paying to creditors won't count) 

it's what you have left over to give creditors and if it's more than £75 , you won't get a DRO.

a dro is insolvency and not the same as token payments or a debt management plan, every detail of outgoings and income will be examined and checked.
and proof of your earnings and partners earnings.
 read my post DRO what a shambles.

mancity22

Thanks Stu, but the person I spoke to at Money Wellness didn't ask for anything to do with my partner just my wage slips and bank statements. My debts are not tied to my partner and he isn't liable for anything. We just split rent, council tax, water, gas and electric. Well we will do when I have the money and I'm not paying debts. 

stu12345_2

your credit cards debts etc are nothing to do with your partner,  unless you have joint ones, which you don't.

 what will be asked is do you live with someone,  they run a credit history check on you to see all your debts, then they ask have you paid one creditor  more than you should have done in the last 2 years over another creditor, then they ask what is partners wages, what is your wages, then the advisor will work out a % ratio split into the normal bills, eg gas, food, rent, water,  council tax, petrol, electricity and work out what you should be contributing in the house hold.
( not what your partner feels is right or what they are actually doing, but the correct amount split, and that is what is used all the time, be it a dro, bankruptcy,  even benefits
then if after all that you have less than the £75 a month left ,( remember  this is after your contribution to normal priority bills, not creditors bills, but normal bills )then they may proceed with a full dro application 

from my experience it is much much harder to get a dro if you work and even harder if you share a home with a partner and hence living costs split

the easiest are those that live on their own and claim some sort of disability benefit and thus are very poor and are not expecting to increase money in the next 12 months , the dro period 

I'm applying again with Christians against poverty cos money wellness were shocking, rude and flippant to me 

my wife and I fitted fine into the criteria ,( less than £50.000 in debt , low paid, etc) but money wellness said as we are low paid we are required to claim any benefits if we are due it,( be it UC, JSA, council tax benefit) in a dro application (we are not required, but advisor said , we must claim or dro will be rejected by the insolvency practitioner,first mistake by money wellness)

second mistake is the advisor said we are due a tiny amount of UC, but then that makes us full time job seekers, being on UC, thus we would thus  get better bigger paying jobs within 12 months which would cancel our DRO. we said we will not be increasing our wages or hours from our current jobs

I said we are above the administrative earnings allowance threshold for UC and hence not required to be job seekers for higher paying jobs, the advisor blatantly ignored this and refused to let us go ahead with application.

"If earn above the AET

If you earn the individual AET or more, you do not need to actively look for more or better paid work."
HM GOV site

Additionally, if you’re in a couple, and your combined earnings are equal to or higher than the couple’s AET, you or your partner do not need to actively look for more or better-paid work."

we earn about £1600 , the AET is £1437

my wife paid £25 too much to one creditor over another recently and the advisor said dro maybe rejected as it's preferential treatment 

stu12345_2

I assume you have had the gruelling 2 hour phone call with money wellness dro advisor .

again it seems even if you don't tell them your partner's income , they still calculate your  contribution to household bills, and pick the standard 50 50 split . it is down to the intermediary to decide the split.
so you would list the total rent, gas , water, food bill and they would use the you pay half method 



goggle joint budgets in Debt Relief Orders 

( note the section  below in the article about where a partner refuses to give their income details!!)

this example explains different scenarios