moratorium questions and advice on DRO application please

horizons_call · 3 October 2019 at 11:22PM

Hi everyone

I am looking to apply for a DRO very soon but I have some questions I have not been able to find the answers to.

1
I have a holiday planned during what will be the moratorium period. (There has been sacrificing and putting aside for this holiday for years, so please don't feel it is being frivolous) Am I better off holding onto the money for the tickets, counting that cash as an 'asset' during the application and then using it soon after to purchase tickets, or would it be advisable to purchase the ticket first then count the ticket itself as an asset during the application? Does it matter? The cash/ticket cost added to my current assets will total less than £1000 so neither should exclude me from the DRO I think?

2
Can I apply for a credit card during a moratorium period? The sole reason - I would really like to use a credit card for the ticket purchase for the protection, especially with certain holiday companies being in the news recently. According to MSE I have that protection if I have even paid a single pound of the cost by credit card, which is all I want to do and then pay it off immediately. Due to this, no need to declare the DRO as it would not need to be over £500, it could just as easily be a credit limit of £1, as that would allow the protection.

3
I know DRO will affect my credit rating but I know there are credit rebuilder cards people get immediately after a moratorium period has finished so I think I should be able to get one of those with a tiny credit limit? Why are people advised not to start rebuilding their credit during the DRO in advance, is this a terrible idea? Why wait?

Stepchange adivised that I should not apply for credit after my first contact to them for guidance, which is why I am asking about applying for the credit card once the DRO has started as I assume that is different.

4
Lastly, I have read that during a DRO application a bank statement is requested, or sometimes several, to show your income and expenses match what you declare. I have been living off a different budget than I will be in the next 12 months, skipping lunches, not socialising or meeting with friends, etc, as well as some outgoings that will not be there in future, so a recent bank statement would not demonstrate the sustainable budget I would need moving forward. Is this a big problem? Will this require delaying the dro application? Will income or outgoings before the application matter?

Along similar lines, I also read that budgeting money to go into a savings account as part of your budget during the dro is acceptable sometimes. Is this true? How much is acceptable and does thst count toward a surplus or as an expense? That would really be a good way of starting a debt-free future off on the right foot.

Thank you for reading and I hope you can help

I will say that I have read a lot of wonderful advice here and I do want to say thank you to those of you who give your time to be such a significant help to people, as well as those of you who share your stories - as someone who has read a great deal without an account, I can tell you that you are genuinely helping and inspiring many more than you know.

fatbelly · 4 October 2019 at 12:58PM

1. Whichever way, it would count as an asset and should be declared. It's OK as long as your assets total less than £1000

2/3. I doubt anyone would give you a credit card but you seem to have understood the rules so ...
Alternatively get one now. If it's a card with zero balance it's not a debt and doesn't get a mention on the application

4 It's your application o declare your budget going forward and include a reasonable amount for food.

Savings are after-acquired assets and if they stay under £1000 - no problem. Over £1000 there is some flexibility but I wouldn't go there unless you had to.

horizons_call · 4 October 2019 at 9:52PM

Hi fatbelly.
Thank you for your reply.

fatbelly wrote: »

1. Whichever way, it would count as an asset and should be declared. It's OK as long as your assets total less than £1000

Fully intend to declare it. My main worry there was that the people who make the decisions might not like that I spent several hundred pound on something other than my debts right before my DRO application and I also didn’t know if it mattered what it was. I don’t want it to seem that I’m not taking this seriously.

fatbelly wrote: »

2/3. I doubt anyone would give you a credit card but you seem to have understood the rules so ...
Alternatively get one now. If it's a card with zero balance it's not a debt and doesn't get a mention on the application

Thank you, I didn’t know that. The reason I haven’t applied for one yet is that Stepchange told me I should not be seen applying for more credit once I started seeking help for my current debts. I took it that the application or acquisition or further credit was not allowed and I was under the impression it could severely hurt my chances of getting a DRO if it was done before. I gather from your response that I have misunderstood their advice?

fatbelly wrote: »

4 It's your application o declare your budget going forward and include a reasonable amount for food.

Savings are after-acquired assets and if they stay under £1000 - no problem. Over £1000 there is some flexibility but I wouldn't go there unless you had to.

Thank you.
I was worried I might have to provide an ‘example month’ or something through statements when I apply, as I was sure I read that somewhere.

On the savings, I certainly wasn’t thinking of that sort of amount so that should be ok, I expect it would be quite minimal but I like the idea of getting into a habit of saving regularly, even with small amounts. Is it true that a small monthly amount for savings can be included in my budget (Stepchange don’t have an option for that) or would savings just be seen as ‘surplus’ that I then can decide to put into savings?

Thanks again,

fatbelly · 4 October 2019 at 10:58PM

I really don't think it matters whether you have spent that money on the holiday ticket or not if your assets are less than £1000. There is no question that goes into a lot of detail.

You've probably not misunderstood their advice. It may breach their T&Cs but it's not against the DRO rules. There was a thread where we discussed this and National Debtline contributed.

https://forums.moneysavingexpert.com/showthread.php?t=5410486

Once they've done a credit check, they won't be looking again and anything with a zero balance just gets overlooked anyway.

Obviously if you have a card you're intending to use, it must have zero balance going into the DRO.

You are allowed a surplus of up to £50 per month so they can't really object if you save a small sum. The new Standard Financial Statement, on which everything is based now, has a line for an amount for savings

horizons_call · 10 October 2019 at 11:33PM

Hi, wanted to get back to you.

I have taken some time to digest it all and am finally feeling ready to go for it. Feels like a big leap.

Thank you for your time and help!

moratorium questions and advice on DRO application please

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