Pre DRO clarification not covered on gov website

bobbydazzler1974

Hi, 
so in short, I’m off work ill, I’ve got a disability as recognised under the equalities act 2010. Settlement with employer possible, claiming UC standard rate and housing element, and at risk of homelessness, council housing team are supporting. CAB helping with £30,000 debt, DMHEF should be on its way to creditors but a DRO is looking like the best option probably around Dec or Jan.  

I will lose my work car when employment is terminated. if I get a settlement amount from work in Oct or Nov, I think I can buy a car for up to £4000 value as I will need it for my independence,  due to my disability I will struggle to find suitable and sustainable employment, therefore is it acceptable use of the settlement money remaining after car purchase, and to ensure I have stable accommodation and income,  to use the remaining money to buy ‘tools of the trade’ to start my own business (it will be trading as my name, it won’t impact universal credit as the ‘start up period’ of 12 months is allowable as far as I can see re universal credit).  

My concern is that whilst the DRO is probably the best option out if the formal 3, DRO, Bankruptcy & IVA.  Will the intermediary or OR see the business setup costs as a grey area or running down funds to fall within DRO criteria?  The business, a photography business is genuinely something I think would give me the creative freedom and income from that I could sustain with my ADHD and Autism, compared with working for an employer where I would struggle.   

I have scoured the internet and even in great detail the governments website for an answer to this question and cannot see anything that could come close to an answer or potential mention of similar situation. 

Is it a case of do it and see what happens? Worst case is the DRO is declined and I can appeal.  

Any help on clarity with this would be greatly appreciated.  

fatbelly

I don't see a problem providing you fit within the criteria:

Car worth less than 4k

All other assets incl savings less than 2k

Brie

fatbelly said:

I don't see a problem providing you fit within the criteria:

Car worth less than 4k

All other assets incl savings less than 2k

That may be the issue of you're working as an individual doing something rather than someone working for your own business (if you know what I mean).  If they are the businesses tools they shouldn't count but if they are yours they should.  So if you are a photographer buying lots of stuff, fancy camera with all the lenses, spotlights, kitting out a darkroom, all the tools that could easily take you up to £2k.  If you are doing fancy stuff with your mobile and a computer programme you'd likely be fine.  

Brie

If the choice is between bankruptcy, IVA and DRO I'd suggest you go the DRO as the best option, assuming CAB agrees.  

Bankruptcy is expensive, do you have the fee of £680?  IVA won't be a good idea (in my opinion) if you are trying to set up a business and don't know what your income will realistically look like.  

Have a read of this to compare the debt solutions.....

Debt solutions - what is your best option?

bobbydazzler1974

Brie said:

fatbelly said:

I don't see a problem providing you fit within the criteria:

Car worth less than 4k

All other assets incl savings less than 2k

That may be the issue of you're working as an individual doing something rather than someone working for your own business (if you know what I mean).  If they are the businesses tools they shouldn't count but if they are yours they should.  So if you are a photographer buying lots of stuff, fancy camera with all the lenses, spotlights, kitting out a darkroom, all the tools that could easily take you up to £2k.  If you are doing fancy stuff with your mobile and a computer programme you'd likely be fine.  

Hi, and thanks, so if I set myself up as self employed as a landscape photographer, built a website, bought camera gear and did some marketing, say a total outlay of £6000 and then 2-3 months later applied for a DRO, is the OR likely to decline it on the grounds that the camera equipment is not classed as ‘tools of the trade’ even though they are, if I am a sole trader trading under my own name. Or will they say I deliberately ran down a lump sum of money to get within the threshold/limits imposed for a DRO? despite being able to evidence it was and will be to try and build a sustainable business and provide income. 

fatbelly

If you are actively trading as a photographer then cameras are tools of the trade

https://www.gov.uk/guidance/debt-relief-orders-guidance-for-debt-advisers#tools-of-the-trade