DRO’s and IVA’s
Options
cornish_donkey
Posts: 148 Forumite
in IVA & DRO
Hi my husband has been signed off work and is currently receiving SSP but will be claiming ESA for the foreseeable, he has also made a claim for PIP. I do not work and claim Carers allowance for my daughter for whom we receive DLA and a disability element on child tax credits. My husband has around 15k on credit cards which we have been paying the minimum payments for as we cannot afford anymore but now we are not sure if we can pay at all! I have been looking into a DRO for him but am confused by the qualifying criteria. Is our benefit classed as spare income? How much should we have to live on? Is it £50 each spare income per adult per household? What will happen to my credit rating and car?
Or is an IVA an option?
I’m very worried 😟
Or is an IVA an option?
I’m very worried 😟
0
Comments
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You are right that the credit cards are non-priority debts and if things are tight you do not pay them. You may want to post a statement of affairs so we can have a look at the detail
Let's rule out an IVA as long as you are in rented accommodation as you would need a fair bit of surplus income to make a proposal and I can't see that if your household income is going to be ESA/CA/CB/CTC.
The PIP is invisible in an insolvency solution so we can ignore that for now.
As for a DRO the qualifying criteria are:
•Must not be a homeowner,
• Debts less than £20,000,
• Can have a car worth up to £1000,
• No other assets of more than £1000,
• Must have £50 or less left at month end, after all essential payments have been made (not inc debt repayments),
• Cannot have had a DRO in last 6 years.
They are an individual solution so it is your husband's debts and income and assets that have to meet the above conditions. There's a £90 fee and they work well for most people who do one.0 -
You are right that the credit cards are non-priority debts and if things are tight you do not pay them. You may want to post a statement of affairs so we can have a look at the detail
Let's rule out an IVA as long as you are in rented accommodation as you would need a fair bit of surplus income to make a proposal and I can't see that if your household income is going to be ESA/CA/CB/CTC.
The PIP is invisible in an insolvency solution so we can ignore that for now.
As for a DRO the qualifying criteria are:
•Must not be a homeowner,
• Debts less than £20,000,
• Can have a car worth up to £1000,
• No other assets of more than £1000,
• Must have £50 or less left at month end, after all essential payments have been made (not inc debt repayments),
• Cannot have had a DRO in last 6 years.
They are an individual solution so it is your husband's debts and income and assets that have to meet the above conditions. There's a £90 fee and they work well for most people who do one.
Thank you for your reply. I will post my statement of affairs in a bit.
We have no assets, owe below £20,000, we do not own a property and the car is mine worth around £3,000.
What benefits are taken into account or disregarded as income?
And what can we do to solve this if we have more than £50 spare a month not including debt repayments but cannot afford to make repayments?0 -
I doubt you (or rather your husband) would show >£50 surplus.
PIP/DLA are excluded in that you can put them on the income side and the care and mobility needs side.
If there are any debts in your name you would probably do a debt management plan.0 -
I doubt you (or rather your husband) would show >£50 surplus.
PIP/DLA are excluded in that you can put them on the income side and the care and mobility needs side.
If there are any debts in your name you would probably do a debt management plan.
There are no debts in my name only the household bills are in my name.
What do you mean by “PIP/DLA are excluded in that you can put them on the income side and the care and mobility needs side”?0 -
You asked
What benefits are disregarded as income?
The answer is
PIP and DLA
There are some more obscure ones also disregarded.
But put everything on your soa so we can see them.0 -
Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 0
Benefits................................ 1563
Other income............................ 0
Total monthly income.................... 1563
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 18
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 70
Gas..................................... 70
Oil..................................... 0
Water rates............................. 27
Telephone (land line)................... 30
Mobile phone............................ 95
TV Licence.............................. 13
Satellite/Cable TV...................... 50
Internet Services....................... 20
Groceries etc. ......................... 560
Clothing................................ 0
Petrol/diesel........................... 40
Road tax................................ 20
Car Insurance........................... 96
Car maintenance (including MOT)......... 0
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 30
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 9
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 8
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1166
Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 3000
Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 300......(18).......0
Total secured & HP debts...... 300.......-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................6500......60........0
Credit card....................5000......48........0
Credit card....................2000......30........0
Catalogue .....................1000......60........0
Credit card....................5000......50........0
Total unsecured debts..........19500.....248.......-
Monthly Budget Summary
Total monthly income.................... 1,563
Expenses (including HP & secured debts). 1,166
Available for debt repayments........... 397
Monthly UNsecured debt repayments....... 248
Amount left after debt repayments....... 149
Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total HP & Secured debt................. -300
Total Unsecured debt.................... -19,500
Net Assets.............................. -16,800
Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.0 -
The above is the household finances for both of us but the car is mine so I’m not sure if that makes a difference? It looks like we will be able to make minimum payments but with the way things are neither of us are going to be working anytime soon and the finances do not include clothing and school outings for the kids. Is there anything we can do? If we carry on paying minimum payments we’re going to be struggling like this until old age ��0
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I’ve been on the stepchange website and they do not recommend an IVA but bankruptcy is an option what are your thoughts?0
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I think he'll be OK for a DRO but he needs to act before he gets to 20k.
I think you've put daughter's DLA in there, which is not income in a dro. His share of the income is small, so likewise his share of the surplus.
I doubt you have as much surplus as the soa shows, though it looks like you will be able to survive on the reduced income.
There is nothing for rent, council tax, school expenses, clothing (suggest 86), car maintenance (suggest 25), haircuts (suggest 20)
If you're Cornish and in Cornwall, the CAB have dro intermediaries in every major town.
Is the HP Brighthouse or something?0 -
I think he'll be OK for a DRO but he needs to act before he gets to 20k.
I think you've put daughter's DLA in there, which is not income in a dro. His share of the income is small, so likewise his share of the surplus.
I doubt you have as much surplus as the soa shows, though it looks like you will be able to survive on the reduced income.
There is nothing for rent, council tax, school expenses, clothing (suggest 86), car maintenance (suggest 25), haircuts (suggest 20)
If you're Cornish and in Cornwall, the CAB have dro intermediaries in every major town.
Is the HP Brighthouse or something?
Thanks for the reply.
The benefit income is made up from ESA, child benefit, Carers allowance and child tax credit for 2 children with a disabled element for 1 child.
And I’m not from Cornwall lol I just couldn’t think of a username :rotfl:0
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