DRO

Savenotspend123

I know the advice is stop paying and wait for defaults before setting up a DMP but does that also apply to setting up a DRO? Thanks

2021rdsunshine

Savenotspend123 said:

I know the advice is stop paying and wait for defaults before setting up a DMP but does that also apply to setting up a DRO? Thanks

No it doesn’t. If your option is a DRO and your circumstances allow for it you apply through an intermediary, no need to wait for defaults. 

fatbelly

The advice to stop paying is correct even though there is no £90 fee to save up now.

In the lead-up go a DRO, you must treat all creditors equally and the best way to do that is to pay everyone nothing.

This does not apply to rent arrears for a place where you are currently living nor to any excluded debt.

When the dro is granted, all creditors must show a default of the same date or earlier

sourcrates

A DRO is a form of insolvency, so statutory rules apply to the recorded dates of default for your included debts etc.

Its not the same for debt management, as its a much less formal process.

2021rdsunshine

fatbelly said:

The advice to stop paying is correct even though there is no £90 fee to save up now.

In the lead-up go a DRO, you must treat all creditors equally and the best way to do that is to pay everyone nothing.

This does not apply to rent arrears for a place where you are currently living nor to any excluded debt.

When the dro is granted, all creditors must show a default of the same date or earlier

OP has stopped paying their debts in June according to other threads. Does that mean they have to wait for the debts to default and appear on their credit file before applying for a DRO? 

fatbelly

The credit file is checked by the Insolvency Service but that's just in case the debtor is deliberately not including all debts - in which case there will be further questions asked of the Intermediary.

Many debts included in a DRO never appear on a credit file and a qualifying debt is a qualifying debt whether or not the contractual payments are still being made

2021rdsunshine

fatbelly said:

The credit file is checked by the Insolvency Service but that's just in case the debtor is deliberately not including all debts - in which case there will be further questions asked of the Intermediary.

Many debts included in a DRO never appear on a credit file and a qualifying debt is a qualifying debt whether or not the contractual payments are still being made

Yes that’s what I meant . I think the OP was asking more about defaults being already applied at the time of DRO

Savenotspend123

Yes that's correct. I meant does it affect the DRO if any defaults are already applied before the DRO?

stu12345_2

default or no default it don't matter, what matters is the total debt value £50,000 limit.

sourcrates

Savenotspend123 said:

Yes that's correct. I meant does it affect the DRO if any defaults are already applied before the DRO?

One has no bearing on the other, in fact you would expect accounts to be long overdue if consideration was been given to a DRO.

Savenotspend123

Thank you for your advice. We thought the DRO was the right decision for us but we will probably have to do a self managed dmp initially. My son left school in July and he was due to start an apprenticeship in Sept which results in child benefit and Universal Credit reducing and meant we had little left to pay any debts (around £60 left). He was let down and now he is going to Sixth Form which means we will keep those benefits and obviously it leaves us with more spare (over the DRO threshold) around £150.  He is however still going to be looking for an apprenticeship and could possible leave sixth form in a few months which means again our income drops so we can look at a DRO again then. We stopped payments in June and have no contact with creditors. No defaults yet and we are managing to put money up for emergencies so that's good.