Debt Relief Orders (DRO) - Information & help thread

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  • Clothkitty
    Clothkitty Posts: 8 Forumite
    I am currently unemployed with 0 savings and debts of £7500 made up of an overdraft, bank loan in credit card
    I have a 35% stake in a shared ownership house which I paid for with cash so no mortgage.
    I am struggling to pay my bills and live at the moment and have contacted CAP for some help. They have advised opening a basic bank account with a non HSBC/M&S bank and moving my direct debits etc there.
    I want to avoid having an IVA and was wondering if a DRO is a good move and if I am eligible for one?
  • fatbelly
    fatbelly Posts: 20,345
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    Clothkitty wrote: »
    I am currently unemployed with 0 savings and debts of £7500 made up of an overdraft, bank loan in credit card
    I have a 35% stake in a shared ownership house which I paid for with cash so no mortgage.
    I am struggling to pay my bills and live at the moment and have contacted CAP for some help. They have advised opening a basic bank account with a non HSBC/M&S bank and moving my direct debits etc there.
    I want to avoid having an IVA and was wondering if a DRO is a good move and if I am eligible for one?

    Because of your property ownership you do not qualify for a DRO.

    CAP are correct that you should not be banking where you have debts and I am sure they have explained that this is because of the bank's right of set-off.

    Please tell anyone who tries to sell you an IVA for £7500 to get lost.

    If you have any surplus income after essential bills (including rent) then you can consider a debt management plan.

    Credit cards, personal loans and overdrafts are non-priority debts so, if necessary, they get nothing.

    If you want to post a statement of affairs in a new thread, we could take a look at it for you.
  • National_Debtline
    National_Debtline Posts: 7,998
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    Clothkitty wrote: »
    I am currently unemployed with 0 savings and debts of £7500 made up of an overdraft, bank loan in credit card
    I have a 35% stake in a shared ownership house which I paid for with cash so no mortgage.
    I am struggling to pay my bills and live at the moment and have contacted CAP for some help. They have advised opening a basic bank account with a non HSBC/M&S bank and moving my direct debits etc there.
    I want to avoid having an IVA and was wondering if a DRO is a good move and if I am eligible for one?


    Hi Clothkitty


    You won't be eligible for a DRO - the stake you hold in the shared ownership property is enough to confirm that. If CAP thought it was relevant, they'd have mentioned it already.


    Nor will an IVA be viable right now (if ever). If you're struggling to pay the bills you certainly won't have anything meaningful left over to throw at the debts for the time being.


    Rather than trying to home in on any particular debt solution right now, your immediate focus needs to be on following CAP's advice re: the new bank account and letting your creditors know you're seeking advice and would appreciate some breathing space while you act on it. If CAP haven't already provided you with any letter templates for this purpose, this may come is useful:


    https://www.nationaldebtline.org/EW/sampleletters/Pages/Hold-action-on-your-account-%28sole-name%29.aspx


    Dennis
    @natdebtline


    EDIT - cross-posted with fatbelly who is clearly a quicker typist than me (not difficult).
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
  • keletubbie
    keletubbie Posts: 658
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    I am in the process of applying for a DRO with the help of Stepchange.

    As a little background... I have a lot of debt due to a partner who didn't pay bills while I was ill. He was also sorting out payments for a consolidation loan... but didn't actually pay off the debts it was for. I only found out when I moved out and the demands started arriving. I tried to balance it for 3 years, but my health is deteriorating and it's just getting worse.

    I currently live alone with my daughter in a housing association property. However, my partner of 2 years is set to inherit a 6 figure sum in the next few months and buy a property where the 3 of us plan to live. If I move in with him during the 12 months, is this considered a significant change of circumstances? Would it be better for us to hold fire for 12 months?
    Best wins: Luxury weekend in Russia, family holiday to France, catered BBQ for 20, Selfridges shopping spree, jolly to Majorca, £1,000 See Tickets vouchers, £500 John Lewis vouchers, five-star weekend in Provence!
  • fatbelly
    fatbelly Posts: 20,345
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    Well it's a change of circumstances, yes. But would it take you over the £50 surplus?

    What income would you have at that point? What would your share of the expenses be? You don't have to give me the figures but those are the two relevant questions.

    However this could all take a lot longer than you think. He doesn't even have the money yet. He can't even start looking for property. When he does find one, the buying process takes time, some fall through. Then when he does find one, does he want to move in straight away, let alone move you in straight away? There may be some work needed.
  • keletubbie
    keletubbie Posts: 658
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    fatbelly wrote: »
    Well it's a change of circumstances, yes. But would it take you over the £50 surplus?

    What income would you have at that point? What would your share of the expenses be? You don't have to give me the figures but those are the two relevant questions.

    However this could all take a lot longer than you think. He doesn't even have the money yet. He can't even start looking for property. When he does find one, the buying process takes time, some fall through. Then when he does find one, does he want to move in straight away, let alone move you in straight away? There may be some work needed.

    Thanks for getting back to me !!!128522;

    If I moved in with him, I would only be making a token contribution to bills, so my income would be much better. I currently have £200 less coming in than going out. I'm disabled, and would have drastically cut my hours at work years ago if it hadn't been for the debts.
    Best wins: Luxury weekend in Russia, family holiday to France, catered BBQ for 20, Selfridges shopping spree, jolly to Majorca, £1,000 See Tickets vouchers, £500 John Lewis vouchers, five-star weekend in Provence!
  • fatbelly
    fatbelly Posts: 20,345
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    You mean your surplus would be greater because you expenses would decrease

    Your income would not increase and, if you're on any means tested benefit, you will probably lose that.

    If you get DLA or PIP that would not be affected and it does not count as income in a DRO

    At a negative surplus of £120 you could be £170 a month better off (well £169) and still stay qualified.

    If you want to reduce your hours at work that's up to you.

    One final point - the DRO calculation will expect you to contribute proportionately to the household bills. So if he earns three times what you do, he pays times more, on paper. In practice you night pay nothing but that's the way the calculation is normally done.
  • keletubbie
    keletubbie Posts: 658
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    fatbelly wrote: »
    You mean your surplus would be greater because you expenses would decrease

    Your income would not increase and, if you're on any means tested benefit, you will probably lose that.

    If you get DLA or PIP that would not be affected and it does not count as income in a DRO

    At a negative surplus of £120 you could be £170 a month better off (well £169) and still stay qualified.

    If you want to reduce your hours at work that's up to you.

    One final point - the DRO calculation will expect you to contribute proportionately to the household bills. So if he earns three times what you do, he pays times more, on paper. In practice you night pay nothing but that's the way the calculation is normally done.

    Thanks for the clarification. I think keeping my place for the 12 months is probably advisable as the plan will be to have little/no mortgage (currently my biggest expense). I'm just tired !!!128522;
    Best wins: Luxury weekend in Russia, family holiday to France, catered BBQ for 20, Selfridges shopping spree, jolly to Majorca, £1,000 See Tickets vouchers, £500 John Lewis vouchers, five-star weekend in Provence!
  • fatbelly
    fatbelly Posts: 20,345
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    keletubbie wrote: »
    Thanks for the clarification. I think keeping my place for the 12 months is probably advisable as the plan will be to have little/no mortgage (currently my biggest expense). I'm just tired !!!128522;

    You live in a housing association property. Where does the mortgage come in?
  • keletubbie
    keletubbie Posts: 658
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    fatbelly wrote: »
    You live in a housing association property. Where does the mortgage come in?

    The house to be purchased with the inheritance money will have little/no mortgage, whereas housing costs are my biggest expense right now. :(
    Best wins: Luxury weekend in Russia, family holiday to France, catered BBQ for 20, Selfridges shopping spree, jolly to Majorca, £1,000 See Tickets vouchers, £500 John Lewis vouchers, five-star weekend in Provence!
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