DRO - income deficit

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I hope someone can help me. My DIL has just had a CCJ and asked me to help. She has debts of 11k and yesterday she and I phoned PayPlan who were really helpful and recommended a DRO. They sent us all details and recommended that we contact Citizens advice. We were so relieved, however I noticed on the letter that it said 'in order for your DRO to be successful it is important that you address the monthly shortfall in your budget'


My son is self employed but suffers terribly from anxiety and depression, so much so that for the past few months he has not been earning or contributing to the family. As a result I have been helping them out by transferring money to my DIL - £400 or £500 a month. I am happy to do this until my son is feeling better. They have two children and I can afford to help and would never see them go without


TBH he only worked part time and never earned a great deal, but was able to contribute.


I am worried now that the DRO will be rejected? These are old debts and she has not applied for credit for a several years, and with my help doesn't need to.
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  • sourcrates
    sourcrates Posts: 28,724
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    Hi,

    You need to stop transferring money to her account, the IS will want to know what it’s for, what is wrong with there budget exactly ?

    To qualify for a DRO the applicant must have £50 or less left in their budget at month end.

    Do not include debt repayments in that budget, so tot up everything they spend, excluding any debt repayments, and you MUST be left with £50 or less in order to qualify.
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  • Dorothy60
    Dorothy60 Posts: 86
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    Hi Sourcrates. Thanks for your reply.

    To clarify. Since Xmas when my son became ill and has not earned anything from his self employment I have been helping out financially. The lady at payplan understood this.

    When he was working their combined income left them with less than £50 per month when all bills were paid without paying debts. I have been making up the shortfall.

    They do not need credit, these are old debts.

    We have to call CAB and I am worried that they will reject the DRO
  • Hi,

    You really shouldn't need to be subbing them just so they can afford normal household bills and food, are they claiming any benefits they are entitled to such as universal credit?

    Try running their details through https://www.entitledto.co.uk.

    I hope they get sorted soon,

    H x
  • Dorothy60
    Dorothy60 Posts: 86
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    Hi H.

    THanks for your reply. They get Ctc and child benefit. The lady at pay plan suggested applying for esa but we’re hoping his condition improves. He has new meds and is having counselling. None of us wants him to rely on benefits, our aim is getting him better so that he can support his family.

    I read that a DRO can be refused if there is an income deficit. Before we ring CAB which involves DIL and I taking a days holiday I wondered if one the wise people on here could advise
  • It wouldn't be CAB refusing the DRO, they are an intermediary and they would look over the application and process it. They would highlight any areas they think would cause the application to be rejected.


    It would be the DRO Team at the Insolvency Service who have the decision of whether a DRO would be approved.


    The Insolvency Service may investigate further if your son is entitled to benefits and is not claiming. They would expect him to contribute to the household bills, even if its a small amount, and by not claiming benefits how can he contribute?


    They may also question the payments you are making.
    You called the payments 'subs', are you expecting this to be paid back? It would have to come from your son not your DIL as any debt she owes to you would be included in the DRO unless you gifted the money to her.


    Hope this helps
  • Dorothy60
    Dorothy60 Posts: 86
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    Thankyou Toxteth. I understand now why people have been asking me if he claims benefits. Thanks for explaining. No, the money is gifted, I don’t want or expect it back. Okay, food for thought there. May have to consider delaying the DRO application for a few months until he gets better. Just wanted to push ahead with it as DIL has just got a ccj.
  • No worries, it's rare for an intermediary to put forward a DRO application if they feel it will be rejected and they'd discuss it with your DIL before hand. If she definitely wanted to do it they would put it forward anyway.
    It would be shame to waste £90 on the fee for it to be rejected so best to check IF your son can claim benefits - if he gets a letter saying he can't the situation resolves itself.


    If you DIL is concerned about the CCJ she could speak to National Debtline or StepChange as well as CAB - the court look's at what she can afford not what the creditors want so she can fill in an N245 form and get help with fees to amend the payment to a CCJ.
  • Dorothy60
    Dorothy60 Posts: 86
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    edited 26 March 2019 at 8:22PM
    Once again I thank you, sir. It’s much clearer to me now. Funilly enough since they confided in me and I have resolved to help them he feels so much better and has even managed to get some work and just today put some money in the bank! I’ve just been on the phone to him. So if we can keep this momentum going I can stop helping them out and the issue resolved itself. Re the Ccj. May have to bite the bullet and make a couple of payments until we can do true DRO. DIL is afraid of bailiffs and attachment of earning
  • fatbelly
    fatbelly Posts: 20,380
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    Dorothy60 wrote: »
    I read that a DRO can be refused if there is an income deficit. Before we ring CAB which involves DIL and I taking a days holiday I wondered if one the wise people on here could advise

    I'm an intermediary working for Citizens Advice. Most of the DROs I put through now are negative surplus. Benefit income just doesn't cover ongoing bills for most people.

    Don't take holiday just to ring them! Check how your local CA likes to be contacted. For mine, texting them works best. They then phone back and arrange an appointment. But each CA differs on that.
    Dorothy60 wrote: »
    Re the Ccj. May have to bite the bullet and make a couple of payments until we can do true DRO. DIL is afraid of bailiffs and attachment of earning

    Save it for the £90 DRO fee. No need to worry about bailiffs etc. There are always strategies to delay. If she can get remission of court fees, try an n245 to slow things down.

    You should know that a third party can do what it likes with its money. So rather than you pay them, if there are bills needing paying, you can pay them direct.
  • Dorothy60
    Dorothy60 Posts: 86
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    Thank you so much, Fatbelly, I really appreciate this.


    I think we should wait a couple of months and hope that my son continues to improve, get some work and manages to contribute towards the family income. Fingers crossed and thanks everyone for your help.
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