DRO What am I missing?

chaplin2020

Hi
I've been looking into getting a DRO, my debts are just under £50k and i'm left with almost nothing each month so paying debt with debt.

From what I can see the DRO means no payments to creditors for 12 months. If I don't pay them then all those monthly payments will mean I have an amount of disposable income. What happens to that? After 12 months how would they view that? Am I missing something?

fatbelly

Debts under 50k is one criterion you must meet. Others are:

Assets of under 2k, so not a homeowner
Car less than 4k
Surplus income less than £75 per month.
Not had one in past 6 years.

If you had the max surplus, and saved it for 12 months, that's only £900. Never known it be a problem

If you have more than £75 per month surplus then you would be looking at a debt management plan or full bankruptcy 

https://nationaldebtline.org/get-information/guides/debt-relief-orders-ew/

chaplin2020

Sorry but i'm not sure I understand. I have about £40 surplus but thats because I am spending so much on minimum payments and loans. If these are no longer being paid then I will have a lot more. Surely then my circumstances would have changed in 12 months?

fatbelly

If £40 plus whatever you are spending on debts each month equals more than £75 then you do not meet the criteria for a Dro.

Because you don't pay your debts in a DRO

A DRO is a cut-down form of bankruptcy for people who cannot afford to give anything to their creditors ( it's got a bit more lenient over the years)

chaplin2020

Ahh ok. That makes sense then. The £75 is not including any debt payments.

Thanks

PurpleMouse5

Are you cutting back on essentials to make the debt payments at the moment? It's worth checking if you put your essentials up to a fair amount once the debt payments are stopped, whether you would still have over £75 surplus.