DRO and council rent default query

ih8stress

Hi, quick question to @fatbelly @sourcrates @Grumpelstiltskin etc. please

if you have a default on council rent and water rates, does it affect your eligibility for a DRO at all?

Thanks

(posted elsewhere originally but deleted and created this new thread instead)

Brie

Are they included in the debts for the DRO?  

ih8stress

Hi @Brie

I am posting on behalf of a family member who has a telephone consultation tomorrow, so my answers will be vague but they have rent and water arrears which I guess they will be including in their debts, thanks

ih8stress

They applied for a DRO about a year ago but were turned down - reasons unclear - so I'm just trying to help them as they feel they might fail again due to the defaults

Brie

OK - so basic principles which have changed in the last year may work in their favour.

Total debts up to £50k.
Rental property only, i.e. doesn't own a home
Car value to a max of £4k.
Other assets value up to £2k.
Maximum of £75 spare income per month.

Debt Camel is a very good easy read on this.  
What is a DRO (Debt Relief Order) ? (debtcamel.co.uk)

Hope that helps!

fatbelly

That wouldn't exclude them but both debts can be a bit odd.

Water arrears can definitely be included but the water authority may have a bankruptcy clause so that only arrears to the date of the DRO are included. If there was someone else jointly liable, then they may well be pursued for the debt.

Rent arrears must be included but you are allowed to make payment to them from your surplus in order to keep yourself in the property. Some councils do write off the arrears in a DRO but they are not required to, where the tenant is still in place

ih8stress

Thanks @Brie, I've already given then the basics and read up alot on here and elsewhere - I found debtcamel to be very clear and informative.

I haven't seen their SOA, so unable to say what their monthly spare income is - only that they have been depriving themselves of the basics for over a year (only just found this out and encouraged them to apply for a DRO again) in order to try and pay off their debts.

They have tried various forms of advice but been told no help available, which I find appalling. A DMP would be no good due to past trauma.

Would the aforementioned defaults affect any DRO claim?

Thanks

Sorry, I was hoping to keep this short and sweet, ha ha

Brie

No - if you look at Debt Camel it's clear what is and isn't included.

A DRO will clear most kinds of debt, not just money you have borrowed such as credit cards, but also council tax and energy arrears, tax debts and benefit overpayments.

Three that cannot be included in a DRO are:

• student debts;
• magistrate’s court fines, including TV license fines (but fixed penalty charges such as parking fines and the London Congestion Charge can be included); and
• debts incurred through fraud.

I wonder if they were told a DRO wasn't suitable was because the company was trying to sell them on the idea of something else.  Do make sure they are going through a charity/non profit company.  StepChange, NationalDebtline, Community Money Advisers (CMA), Christians Against Poverty, (CAP).  There are other companies that offer free advice but then the advice is the individual do something that will profit the company.  Might help the individual with their debt but a DRO doesn't give any money to anyone so there's no profit in them.  

As for the SOA a conscientious adviser will see how the numbers work and will try to make them work.  So someone might say they only spend £50 a month on food (which is ridiculously low) but an adviser might raise that amount to something more normal, maybe £200 a month which then will change how much is left at the end of the month.  Basically because a lot of people don't budget and can't tell from their own bank statements what they actually spend day to day.  

I wish them the best and hope they succeed.

ih8stress

fatbelly said:

That wouldn't exclude them but both debts can be a bit odd.

Water arrears can definitely be included but the water authority may have a bankruptcy clause so that only arrears to the date of the DRO are included. If there was someone else jointly liable, then they may well be pursued for the debt.

Would the DRO Advisor be able to tell them if the Water company have this clause?  There is nobody else jointly liable

Rent arrears must be included but you are allowed to make payment to them from your surplus in order to keep yourself in the property. Some councils do write off the arrears in a DRO but they are not required to, where the tenant is still in place

Again, would the DRO Advisor help them to set up an affordable arrangement payment for the Rent arrears (if they haven't already got one set up, I know they have spoken to the Council about them recently)

Thanks

fatbelly

Most people, I think, now pay for water on a metered basis. If so, there's no problem.

I'd like to think their advisor would help them with the fine issues. That used to be the case, and was why the Insolvency Service set them up the way they did.

But these days, most people seem to do them through one of the hubs -  Money Wellness or CA - and aftercare seems nonexistent.

ih8stress

Brie said:

No - if you look at Debt Camel it's clear what is and isn't included.

A DRO will clear most kinds of debt, not just money you have borrowed such as credit cards, but also council tax and energy arrears, tax debts and benefit overpayments.

Three that cannot be included in a DRO are:

• student debts;
• magistrate’s court fines, including TV license fines (but fixed penalty charges such as parking fines and the London Congestion Charge can be included); and
• debts incurred through fraud.

I wonder if they were told a DRO wasn't suitable was because the company was trying to sell them on the idea of something else.  Do make sure they are going through a charity/non profit company.  StepChange, NationalDebtline, Community Money Advisers (CMA), Christians Against Poverty, (CAP).  There are other companies that offer free advice but then the advice is the individual do something that will profit the company.  Might help the individual with their debt but a DRO doesn't give any money to anyone so there's no profit in them.  

As for the SOA a conscientious adviser will see how the numbers work and will try to make them work.  So someone might say they only spend £50 a month on food (which is ridiculously low) but an adviser might raise that amount to something more normal, maybe £200 a month which then will change how much is left at the end of the month.  Basically because a lot of people don't budget and can't tell from their own bank statements what they actually spend day to day.  

I wish them the best and hope they succeed.

I'm not sure who they talked to last time but think they have got an Advisor through Citizens Advice this time. They haven't got back to me yet since I asked them.

Thank you for your kind words, I've got my fingers crossed for them