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    • Louisedebt
    • By Louisedebt 8th May 18, 10:40 PM
    • 8Posts
    • 0Thanks
    Louisedebt
    Debt relief order and garentor loan
    • #1
    • 8th May 18, 10:40 PM
    Debt relief order and garentor loan 8th May 18 at 10:40 PM
    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
Page 1
    • sourcrates
    • By sourcrates 8th May 18, 10:58 PM
    • 14,893 Posts
    • 13,972 Thanks
    sourcrates
    • #2
    • 8th May 18, 10:58 PM
    • #2
    • 8th May 18, 10:58 PM
    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.
    Last edited by sourcrates; 08-05-2018 at 11:03 PM.
    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/
    • Louisedebt
    • By Louisedebt 8th May 18, 11:01 PM
    • 8 Posts
    • 0 Thanks
    Louisedebt
    • #3
    • 8th May 18, 11:01 PM
    • #3
    • 8th May 18, 11:01 PM
    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
    • By sourcrates 8th May 18, 11:10 PM
    • 14,893 Posts
    • 13,972 Thanks
    sourcrates
    • #4
    • 8th May 18, 11:10 PM
    • #4
    • 8th May 18, 11:10 PM
    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?
    Originally posted by Louisedebt
    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 ?
    Last edited by sourcrates; 08-05-2018 at 11:12 PM.
    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/
    • Louisedebt
    • By Louisedebt 8th May 18, 11:18 PM
    • 8 Posts
    • 0 Thanks
    Louisedebt
    • #5
    • 8th May 18, 11:18 PM
    • #5
    • 8th May 18, 11:18 PM
    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
    • By Louisedebt 8th May 18, 11:25 PM
    • 8 Posts
    • 0 Thanks
    Louisedebt
    • #6
    • 8th May 18, 11:25 PM
    • #6
    • 8th May 18, 11:25 PM
    I have one for 20 months from sept 17 and one for 18 months from Feb 18
    • fatbelly
    • By fatbelly 9th May 18, 7:18 PM
    • 12,546 Posts
    • 9,613 Thanks
    fatbelly
    • #7
    • 9th May 18, 7:18 PM
    • #7
    • 9th May 18, 7:18 PM
    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
    • By Louisedebt 9th May 18, 9:46 PM
    • 8 Posts
    • 0 Thanks
    Louisedebt
    • #8
    • 9th May 18, 9:46 PM
    • #8
    • 9th May 18, 9:46 PM
    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
    • By sourcrates 9th May 18, 10:09 PM
    • 14,893 Posts
    • 13,972 Thanks
    sourcrates
    • #9
    • 9th May 18, 10:09 PM
    • #9
    • 9th May 18, 10:09 PM
    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.
    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 9th May 18, 10:19 PM
    • 12,546 Posts
    • 9,613 Thanks
    fatbelly
    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
    • By Louisedebt 9th May 18, 10:34 PM
    • 8 Posts
    • 0 Thanks
    Louisedebt
    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.
    • Louisedebt
    • By Louisedebt 9th May 18, 10:42 PM
    • 8 Posts
    • 0 Thanks
    Louisedebt
    My figures
    Rent 360 Rent:17 agreed amount to arrears of 306
    Water 39
    Council tax 65
    Gas/Electricity 103 3 agreed amount to arrears of 1016
    Telephone/mobile/internet 135 Suggested reduction.
    TV licence 13
    Repairs/maintenance 6
    Childcare 543
    Fines/CCJs/decrees 10
    Life insurance/pensions 7
    Hire purchase / logbook loan 117 3 suggested amount to arrears of 93
    Spares/servicing 29
    Road tax 12
    Insurance 119
    Fuel/parking 174
    Food/toiletries/cleaning 260 Reduced from 450
    Medicine/prescriptions 9
    Dentist/opticians 3 Reduced from 11.
    Clothing/footwear 36
    Newspaper/magazines
    Sports/hobbies/entertainment 28 Reduced from 78.
    Children's pocket money
    Other (Overpayment) 30 ESA - 500 outstanding

    No of adults 1
    No of dependants 1

    Your Income Amount
    Take home pay 1,443
    Child Benefit 87
    Child Tax Credit 434




    Total Income 1,964
    Total Expenditure 2,098
    Surplus (Deficit) (-134)



    Budget Comments
    Please Note: Payments are not being
    administered by StepChange Debt Charity.
    • fatbelly
    • By fatbelly 10th May 18, 7:23 AM
    • 12,546 Posts
    • 9,613 Thanks
    fatbelly
    OK so you've got 1964 of income.

    I don't think you've got 1914 of expenditure so I don't think this is a DRO. Potential problems in red

    My figures
    Rent 360 Rent:17 agreed amount to arrears of 306
    Water 39
    Council tax 65
    Gas/Electricity 103 3 agreed amount to arrears of 1016
    Telephone/mobile/internet 135 Suggested reduction. Needs to be cut by half
    TV licence 13
    Repairs/maintenance 6
    Childcare 543
    Fines/CCJs/decrees 10
    Life insurance/pensions 7
    Hire purchase / logbook loan 117 3 suggested amount to arrears of 93
    Spares/servicing 29
    Road tax 12
    Insurance 119
    Fuel/parking 174
    Food/toiletries/cleaning 260 Reduced from 450
    Medicine/prescriptions 9
    Dentist/opticians 3 Reduced from 11.
    Clothing/footwear 36
    Newspaper/magazines
    Sports/hobbies/entertainment 28 Reduced from 78.
    Children's pocket money
    Other (Overpayment) 30 ESA - 500 outstanding
    I make that 1832.50.

    You've got more to pay to your debts if you can reduce your spending - fuel and childcare seem really high, with none of your childcare costs coming back through tax credits.

    May be best posting a full soa on the dfw board. There's a calculator here

    http://www.stoozing.com/calculator/soa.php
    • John-K
    • By John-K 10th May 18, 7:36 AM
    • 654 Posts
    • 1,017 Thanks
    John-K
    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.
    Originally posted by Louisedebt
    This is why the advice on here is never to be a guarantor. You have done what the lender knew you would do, and default, which is why they needed a guarantor to step in for you.

    You did explain to him what it meant I hope?
    • macman
    • By macman 10th May 18, 9:16 AM
    • 42,249 Posts
    • 17,642 Thanks
    macman
    What immediately jumped out there for me was 135 for phone/mobile/internet! That is absurdly high: you should be able to get a basic line rental and broadband deal for 30, mobile SIM only deal for 5 to 10. Instant saving of nearly 1,200pa. If you have an expensive smartphone, sell it and get a basic one for about 60.
    With that level of spend, I'm guessing you have a very large Sky or VM package? You just can't afford this: Freeview, Freesat or Freesat from Sky will cost you nothing.
    This should enable you to rapidly clear your rent and utility arrears: these are priority debts. At 3 per month utilities arrears payback, it will take you 30 years to clear the debt.
    Are you getting the CT single person discount?
    Do you have a water meter?
    Insurance seems high: is this house and car, or just car?
    Are you on the cheapest gas and electricity tariffs offered by your current supplier? They will block a switch, given your level of debt.
    Last edited by macman; 10-05-2018 at 9:26 AM.
    No free lunch, and no free laptop
    • Louisedebt
    • By Louisedebt 10th May 18, 10:41 AM
    • 8 Posts
    • 0 Thanks
    Louisedebt
    OK so you've got 1964 of income.

    I don't think you've got 1914 of expenditure so I don't think this is a DRO. Potential problems in red



    I make that 1832.50.

    You've got more to pay to your debts if you can reduce your spending - fuel and childcare seem really high, with none of your childcare costs coming back through tax credits.

    May be best posting a full soa on the dfw board. There's a calculator here
    Originally posted by fatbelly

    In regards to my fuel spend drive 200 miles a work so the spend cannot be reduced as there are no train stations near by to use public transport.


    My childcare is the cheapest I can find as he attends 7.30am until 6pm so costs cannot be reduced here.


    I do receive tax credits which my spend is accounted for. Total received per month is:

    Child Tax Credit 434





    This is why the advice on here is never to be a guarantor. You have done what the lender knew you would do, and default, which is why they needed a guarantor to step in for you.

    You did explain to him what it meant I hope?
    Originally posted by John-K

    Yes of course and he fully understands and can afford to pay for it but I had hoped there was a way around it.

    What immediately jumped out there for me was 135 for phone/mobile/internet! That is absurdly high: you should be able to get a basic line rental and broadband deal for 30, mobile SIM only deal for 5 to 10. Instant saving of nearly 1,200pa. If you have an expensive smartphone, sell it and get a basic one for about 60.
    With that level of spend, I'm guessing you have a very large Sky or VM package? You just can't afford this: Freeview, Freesat or Freesat from Sky will cost you nothing.
    This should enable you to rapidly clear your rent and utility arrears: these are priority debts. At 3 per month utilities arrears payback, it will take you 30 years to clear the debt.
    Are you getting the CT single person discount?
    Do you have a water meter?
    Insurance seems high: is this house and car, or just car?
    Are you on the cheapest gas and electricity tariffs offered by your current supplier? They will block a switch, given your level of debt.
    Originally posted by macman

    My charges phone and internet and tv are 135. 100 for sky which I am contracted to and cannot change until the end of my 18 months. I have contacted them to try but they have said there is nothing they can do. My mobile phone is 35 per month and contracted until Dec 18 when I plan to move to sim only but until then I wont be able to.


    I am not on a water meter as there are 2 of us in a 2 bed house so if I have understood the advice of MSE correctly its best for me not to have a water meter.


    I am getting council tax discount. The actual cost should be 100 per month.


    The insurance is just car insurance. I drive a 14 year old petrol Peugeot and this is the cheapest quote I could find without having to pay a large upfront cost to change.


    In regards to utilities I was forced to go on to smart meters and the rate is what it is and the debt deducted is controlled by them.


    I truly believe that I have reduced costs everywhere I can and have not inflated them. I am not living a life style where I have money left over. I have a CCJ, people knocking on my door from provident and brighthouse I need this to end and DRO seems the best option for me. I am on medication for anxiety and depression whilst being a single mother working full time and studying at college twice a week in the evenings.
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