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    • Bubble90
    • By Bubble90 10th Apr 18, 3:48 PM
    • 1Posts
    • 0Thanks
    Bubble90
    DRO and starting a business
    • #1
    • 10th Apr 18, 3:48 PM
    DRO and starting a business 10th Apr 18 at 3:48 PM
    Hi. Wasn't sure where to post this or how to word this either so winging this hoping in makes sense.

    Long story short. We lost our rental unexpectedly this time last year after spending a lot of money on it. We were homeless for two months (family of 4 and was soon to be 5). My husband worked his !!! off for us to get the money together for the rental we are in now but we've been on a downward spiral since. Things have kept popping up and due to not having any savings and living pay check to pay check we were forced to take out loans and pay for a lot on finance. Then we had a very cold winter in a very cold house and my third son was born beginning of December when we didn't have a penny and we haven't had a penny since. So in rolls the mountain of debt we can't afford getting worse with every month. We do without so much, I am still wearing my maternity clothes , my landlord hasn't been paid and my kids clothes are all too small. My husband broke his foot and has been off work for 6 weeks and it was a new job which is not reflecting good on him. Anyway, we had spoke to citizens advice just after Christmas and they set everything up for us to go ahead and apply for a DRO. It's April and we have no way of paying for KY and don't know when we will be able to so it has been sitting ready to go since January whilst everything just gets worse. My husband is actually in a well paid job but it just isn't making ends meet. There's always something and now his job feels very unsecure.

    Last week, his poor uncle passed away. He was in the same trade my husband is and his stuff is sitting unused. His aunt was going to sell it all but my husband was thinking of keeping it. He would have everything he needs to start his own business including his uncles contacts and quite a few he had made of his own whilst he has been gauging interest off work with his foot. It is a bit crazy, BUT it would be a good fall back if he returns to work next week to find they no longer want him. He had been there only two weeks when he broke his foot and they haven't contacted him since it happened. He also in a position to claim so they may well sack him if he does (advice of a solicitor was to have a back up).

    So with all that information, I am just wondering. IF my husband loses his job and does decide to continue his uncles business. Will everything for the business be included as our assets (work vehicle, parts, tools) and possibly be taken off us? and would he be breaking the rules if he ran a business whilst DRO restrictions are still in place? If that makes any sense to anyone...

    And sorry if I sound a bit silly, I'm finding it hard to google the information I'm looking !!!128514;
Page 1
    • sourcrates
    • By sourcrates 10th Apr 18, 4:29 PM
    • 13,994 Posts
    • 13,257 Thanks
    sourcrates
    • #2
    • 10th Apr 18, 4:29 PM
    • #2
    • 10th Apr 18, 4:29 PM
    Hi

    DRO Restrictions

    You cannot :

    Take out credit over £500 without telling the lender your on a DRO

    Carry on a business under a different name without revealing your previous business was subject to a DRO

    Set up a limited company or act as a company director without permission from a court.

    You will not have the things taken off you but you would fail the assets criteria.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • fatbelly
    • By fatbelly 10th Apr 18, 6:52 PM
    • 12,238 Posts
    • 9,274 Thanks
    fatbelly
    • #3
    • 10th Apr 18, 6:52 PM
    • #3
    • 10th Apr 18, 6:52 PM
    The details are on the intermediary guidance.

    As for assets it says:

    All the assets that the debtor owns should be included on this form, and the debtor should be actively encouraged to disclose all relevant information in respect of these assets to the Official Receiver.

    Unlike in bankruptcy, the Official Receiver will not assume control of the debtor’s assets as a trustee in bankruptcy would, as there is no vesting of the debtor’s estate under a DRO. However, this part of the application form enables the Official Receiver to determine whether the debtor meets the DRO entry criteria in relation to the £1,000 gross asset maximum.

    If a DRO applicant has gross assets exceeding £1,000 their application will be declined and the debtor will lose their application fee.

    The value of all assets should be recorded in whole numbers. Please do not include any pence in the valuations of the debtor’s assets.

    Please note that it is imperative that the debtor is made aware that the information they provide for this section is both accurate and true. If a debtor fails to provide an open and honest account of their affairs, and this failure in disclosure is later determined by the Official Receiver to be a deliberate undervaluing or a deliberately inappropriate description of their assets when a description is required, the Official Receiver may revoke the DRO. The debtor may also face criminal and civil sanctions in respect of the provision of data subsequently found to be incorrect.

    Hire Purchase and Conditional Sale Agreements

    Items subject to hire purchase or under conditional sale agreements should not be declared by the debtor as an asset, as they will not belong to the debtor until all of the payments under the hire purchase agreement have been paid to the finance company.

    It should be noted that many financial institutions have insolvency clauses contained within the terms and conditions of their agreements that automatically terminate the agreement upon formal insolvency of the debtor.

    For guidance on including arrears and unpaid balances under hire purchase agreements please see pages 55 - 58.

    5.1 Cash in hand (£)
    Please indicate how much money the debtor has access to without visiting a bank, building society or ATM Cash Machine. This should include money not just on their person, but money in their possession (for example, at home). This value should be the total worth of all notes, coinage and foreign currency.
    Cash in hand refers to free capital and would not include funds that are due to be paid out for living expenses, in the normal course of events.

    5.2 Cash at bank or building society (£)
    Please indicate how much money the debtor holds in all their bank and building society accounts, including current and savings accounts, ISA’s etc. Please provide this value as a lump sum.
    Cash at bank or building society refers to free capital and would not include funds that are due to be paid out for living expenses, in the normal course of events.
    Please note, any lump sum including underpaid or backdated benefits received before the DRO is approved is considered cash at bank or, in other words, an asset. However, lump sums of DLA/AA/PIP and equivalent benefits which cannot be paid to the debtor at the same time as DLA/AA/PIP ie. Constant Attendance Allowance under the Industrial Injuries or War Pensions Schemes, War Pensioners Mobility Supplement under the War Pensions Scheme or grants for the use of a vehicle or Armed Forces Independence Payment, can be disregarded.
    Following determination of the approval of the DRO application, should any cash at bank or building society arise as a result of the award of a lump sum payment in respect of an underpayment of benefits, unpaid wages or bonus during the moratorium period, then this will be regarded as property. All lump sums must be notified to the Official Receiver who will assess whether revocation is appropriate using the criteria set out on pages 5 - 6. Please note that revocation could still occur where the lump sum is accompanied by a permanent increase in income which puts the debtor’s surplus income above the DRO eligibility parameter.

    5.3 Money owed to you (£)
    Please indicate how much money any other person or organisation owes to the debtor.
    For example, family or friends, an employer or previous employer, or someone with whom the debtor has done business, may owe money to the debtor. The total amount of monies owing to the debtor should be provided in answer to this question.
    If the debtor has taken steps to recover money owing to them, but they have been unsuccessful in those attempts, provided that the debtor is able to document their unsuccessful recovery attempts, then the debts may be classed as bad and irrecoverable and there would be no necessity to schedule such debts as assets. However the commentary box should be used to explain any such omissions.

    Personal Injury Compensation Payments
    When an intermediary is informed by a client of a right of action relating to personal injury, the intermediary should ascertain whether this includes special damages, e.g. loss of earnings, care and assistance, travel and related expenses. Rights of action should be brought to the attention of the OR so we can note this on the case file, no matter what elements of personal injury (special and/or general damages). Personal injury payments received before a DRO is approved are viewed as property. Personal injury payments received during the moratorium period will be dealt with depending on the composition of the payments (special and general damages). If the compensation relates solely to general damages and is received during the moratorium period, this will not adversely affect the DRO so long as the funds are used only for living expenses and not converted into tangible assets. Should the funds be used to make a large purchase, rather than on living expenses, the OR will consider revocation should the collective value of the debtor’s assets should exceed £1,000.

    5.4 Tools of trade
    Some property which is owned by the debtor can be disregarded when calculating the total value of his/her assets. This includes clothing, bedding, furniture, and household equipment as are necessary for satisfying the basic domestic needs of the debtor and his/her family. This also includes books, tools and such equipment as are necessary to the debtor for use in his/her employment or vocation. If the debtor owns a motor vehicle, see section 5.5 below.

    Please give a description and valuation of any tools or other equipment used by the debtor in the course of their employment, be it business or vocational. The debtor may provide the valuation of the tool, but this valuation should be based upon its resale value, and not its purchase value. This might include the make, model and age of the tool, but not its colour for example. The debtor should also provide the details of the source used to justify the valuation. If the debtor does not own any tools in respect of their trade, please leave this box blank.

    An intermediary may assume that the valuation provided is correct without further enquiry.

    5.5 Motor vehicle*
    Please indicate whether the debtor owns a registered motor vehicle. For the purposes of a DRO, a ‘motor vehicle’ includes a car, motorbike, scooter or any other form of motorised vehicle. Where the debtor has a motor vehicle which is subject to hire purchase, please refer to the guidance on hire purchase agreements on pages 55 - 58.
    If the debtor owns a motor vehicle, please select ‘Yes’ in answer to this question.
    Further questions will then be generated on the form requiring information on the:
    Make
    Model
    Year of first registration
    Registration number
    Condition
    Value of the vehicle.
    If the value of a domestic motor vehicle is less than £1,000, the motor vehicle will be deemed free from being classified as an asset and will therefore not be taken into account by the Official Receiver when determining the debtor’s total gross assets for the purposes of a DRO.
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