Debt relief order and garentor loan

Louisedebt · 8 May 2018 at 10:40PM

Hi all
I've been advised by step change that a DRO is the best plan for me. I don't own my home, i have £14k worth of debt and little to no surplus income. I have two loans that my dad is garentor for and have been advised the debt would go back to him which is what i expected but he is not in a position to pay them and i would not want him to so i wonder if i was to give the money to my father he could pay them. Has anyone done this before?
Is it permitted? Thanks in advance

sourcrates · 8 May 2018 at 10:58PM

Hi,

Im afraid you are stuffed every which way when it comes to a guarantor loan, they can be included in your DRO, but your dad will be chased for them, the DRO protects you, not him.

You would not be able to maintain payment to these loans, as it would be regarded as preferential treatment, plus, doing so would mean you would not meet the minimum income surplus of £50.

The same would apply in Bankruptcy.

What is the reason for your drop in income, is it likely to improve ?

You need to look at another option.

Louisedebt · 8 May 2018 at 11:01PM

Thanks for your reply. My partner and i have split and my debts got out of control from being on maternity leave and having no income.
Could I not withdraw the cash and give it to my dad if he pays it?

sourcrates · 8 May 2018 at 11:10PM

Louisedebt wrote: »

Thanks for your reply. My partner and i have split and my debts got out of control from being on maternity leave and having no income.
Could I not withdraw the cash and give it to my dad if he pays it?

The rules on debt relief orders are quite strict, with severe consequences for those that flout them, you have to show a working budget with less than £50/surplus income at months end, how do you intend to do that if you continue to service these loans ?

If you show favour to one creditor over another, or lie about your budget, or circumstances, your DRO will not be approved or it can be revoked.

Worst case senario you can go to prison, its obvious you can find some money, so why not go into debt management, prioritise the loans, and pay £1 to the rest of your creditors ?

How long do the loans have left to run ?

Louisedebt · 8 May 2018 at 11:18PM

In my step change SOA i have a shortfall of £134 per month. The money I find isn't my money but the money from friends and family who support me.

Louisedebt · 8 May 2018 at 11:25PM

I have one for 20 months from sept 17 and one for 18 months from Feb 18

fatbelly · 9 May 2018 at 7:18PM

A third party (your friends and family) can do what they like with their money.

Laundering it through your account to pay one of your creditors would not be wise.

You are dealing correctly with your debts. Your dad would have realised he was taking full responsibility for the debt when he signed (the money would have been released to him to give to you) and if he cannot now pay for these loans he must take his own advice.

Louisedebt · 9 May 2018 at 9:46PM

Thank you. I don't want him to have to pay and i don't want it to affect his credit rating by him taking step change advice. Although he can afford to pay I just wondered how they monitor your spend over the 12 months as they surely won't track every single penny and ask for receipts especially for withdrawing cash etc.

sourcrates · 9 May 2018 at 10:09PM

You are not tracked at all, everything is taken at your word, but if the insolvency service has cause to think there may be a problem, then you risk a high penalty.

If your friends/family pay that money direct to your dad, then that is there choice, the problem occurs when it enters your account, cut that part out, and you may be able to progress with this.

fatbelly · 9 May 2018 at 10:19PM

How important is his credit rating to him? This was his debt from the moment he signed. I understand that you don't want him to be liable for it but if you ask him he should say that he understood that when he signed.

No, the DRO Unit won't track everything. They rely on you to be honest with them. But if you have a shortfall of £134 per month, I can't see how you can withdraw cash to pay someone else's debts.

I thought maybe he could also go for a DRO but you now say he can afford to pay.

I did a DRO recently for a father and son in the same situation as you. The father took the opportunity to clear some other small debts with the DRO as well as the guarantor loan. He also terminated an HP agreement so he could get rid of that car and get a motobility one.

Both of them seemed happy with the outcome.

Louisedebt · 9 May 2018 at 10:34PM

My father has lived in a council property for 30 years and has just got back on his feet after a bout of bad luck and has been able to borrow money for a car which is worth over £1000 He is thinking about applying for a mortgage to buy the house he resides in and i don't want to be the one to destroy that for him. I assured him that i would make the payments no matter what which is why i am looking for a way around it legally.

Debt relief order and garentor loan

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free