DRO or DMP I don't know?

treshamgirl

I ws made redundant at the start of the year and now work part time for minimum wage and I became a carer for my Father who has Dementia and is living with Cancer. I had been plugging the gaps in my finances with the small savings I have but started to realise this wasn't going to be sustainable. 

I took out a loan last year to help me buy a car and I also used my credit card for a few things. Before I knew it I was over 7000 in debt paying 150 to the loan and 100 each to the cards (still in their interest free periods) this was ok when I was working full time but now I'm not and I can't make any extra income because it will not only take me above the threshold for carers allowance but I need to be around for my Dad so I can't work more hours. 

I contacted a debt support agency and they did a budget with me and found me eligible for a DRO but I am the Financial Power of Attorney for my Dad and this would be revoked if I had a DRO against me. Plus I am scared of the negative consequences for the next 6 years until it is gone from my file. 7000 doesn't seem that much money to have such negative consequences! 

My sister is the second Power of Attorney so I could hand that responsibility to her but I feel like a failure if I do that - like I'm letting my Dad down. 

So then I started thinking about a DMP but looking at my budget realistically I could only afford 50 month max and then this will take 11 years to pay off. Which means my credit history could be affected for all of that time where a DRO would stop affecting me after 6 years. 

However when I am in the position to earn more again I could pay off the DMP more quickly but I am single and I work in the care and support sector and even on a full time there is not a lot of left over income. I am living with my Dad right now which helps me manage but if and when he is no longer here I will need even more money. 

I keep going back and forth about what I should do. I would love to have this debt written off and then I will be more mindful in the future but I feel shame about it and I feel I am letting myself and my Dad down but I also feel trapped by the thought of being in debt for a decade. 

I will inherit a little money one day (when my dad is no longer here and we have to sell the house as he took equity release) which I could use but I also know I could use that money for better things. 

Could you give me advice please? 

ManyWays

The car loan - is this a normal loan that you happened to use for a car or car finance, and how much is the car worth?

I am sorry to have to ask this, and I know these things are never certain, but do the doctors say anything about how long your dad may live? 

treshamgirl

It was a loan that I used to pay for the car as I thought that would be better than finance. The car was 4000 and is less now. 

It's ok that you ask...Dad is on Chemotherapy tablets for lung cancer which he was diagnosed with two years ago. He was receiving Chemotherapy when my Mum was also diagnosed and died 5 weeks later. Which as you can imagine was heartbreaking. I think I overspent on credit cards because I wasn't really thinking rationally for a while. 

The tablets seem to be doing a good job although he is very thin he is still doing well so he could live for years or things could change quickly - we just don't know. 

They also took out equity release Lifetime Mortgage policy five years and that is reducing what me and my two siblings will inherit. They both have their own homes but I'm the youngest and never married so I never got on the property ladder. I'm worried that I won't be granted a tenancy if I have DRO - I had been hoping that with the inheritance (30,000 - 40,000 by my best estimates if dad is with us for a few more years ) I could get on the property ladder and use it as a deposit but if I have a DRO I'm guessing I won't get a mortgage. 

It all feels so complicated. I've always been able to pay my debts relatively quickly and then the last few years happened and I've painted myself into a corner. 

sourcrates

Its correct you cannot hold a POA if you are insolvent, but as you rightly say, a DMP is an informal debt solution anyone can do, however, with only £50 a month disposable income, that might take some time.

Things to try first.

Write to your lenders, explain the situation you find yourself in, you care for your sick father, your income has reduced etc etc, make no mention of any inheritance, tell them you may have to reduce your payments to a token monthly amount of say £5, for the foreseeable future.

Then ask them to make a commercial decision and write the debt off as you cannot afford the repayments.

You may be surprised how many people have had success just from a single letter, although don`t expect miracles, but you should certainly give it a go.

Defaults only stay on file for 6 years after which they are automatically removed, so bad debt does not follow you forever.

ManyWays

If you ask for write offs, it would also help to say you have been told by stepchange that you are eligible for a DRO, however as your father has Alzheimers its vital that you can continue with the Power of Attorney, so you would like them to consider your vulnerability and difficult situation and write off the debt.