End of the Road for DMP payments- Is DRO way to go?

[bladerubber]

Hi All, will try to keep briefly to facts -please let me know if I have missed out anything!

Below is a proposed plan of action and I would request any holes to be picked/ pit falls pointed out,as this is advice I am giving to a very dear friend who,(because I got 6K of his PPI removed has now come to trust me in financial matters!) and I do not want to mislead him-so need more experienced eyes to take a look at it.

He first got into debt problems in 2005/6, then after a period of head-burying, got himself onto a DMP with PayPlan, initially he was working full-time and paying £80 per month, then he was made redundant but kept up the £80 for a while (living from his redundancy money, apx 17K)then reduced it to £40. His redundancy money is now gone, he has recently had to reduce the monthly amount to £25 but has found he simply cannot manage to pay even this amount (now having had to borrow for last utility bill) He lives on JSA of £71.00 per week.
His current total debts are in the region of 14K distributed apx. 7K,4K,1.5K and 2 smaller ones. (banks /cc)

Since being made redundant he has done all he can to get another job (he is an FE lecturer) but 18 months on nothing has materialised and vacancies in his dept are few and far between. In addition his age (57) and health (in his last year of work he was off sick for 4 months with depression and anxiety, something for which he is still on prescription medication) he feels have not worked in his favour. Realistically I dont see his situation as likely to improve anytime soon.


He has no assets except a teachers pension (which he is old enough to take but has yet to mature (60)) His pension (at enhanced level would provide apx 19K lump sum, and 2.7K yearly at current rates)
He was assesed recently for Lump Sum IVA by PayPlan. (Assuming that he could lay his hands on the money) they declared that at bankruptcy his creditors would get 0-3% and they told him they would be making an offer of £1,700 for THIS they needed from him £4000. Needless to say he was not very pleased with this proposal.-at which they immediatelty upped the proposed offer to creditors to 2K. (He is not able to find 4K for this anyhow-so not a current consideration)

Specific Question 1: Would his pension be classified as an 'approved' pension as according to the IS for purposes of excluding from total gross assets in relation to DRO? What exactly they mean by 'approved' I am not sure, I am assuming that each pension would be judged seperately and approved or not taking into consideration size of pot?


I have said that, being in DMP or not he is always able to communicate directly with his creditors, and proposed the following plan.

1. Stop paying DMP
2. Write to creditors directly requesting write off.
3. if Fail= write to creditors request reconsideration,
4. if Fail= write to creditors full and final settlement at what he can scrape together (he judges between 5-8%)
5. if Fail= request reconsideration point out this is last action prior to DRO application.
6. If fail= apply for DRO

Have pointed out that harrasment / threatening letters would prob begin as soon as DMP payments stop but he is ok with that.
Have pointed out the restrictions that come with DRO -but not being fully aware of all the implications of the restrictions, I dont know how useful I can be on this.

Specific Question 2 : Would a DRO exclude him from even working in a ltd company as anything to do with promotion or at managment level?

(IS says 'without the courts permission'-does this have huge implications when it comes to job-seeking- or is this 'permission' a formality that can be done without firm offer of a job?)
Would be grateful of any implications (not what they are) of the restrictions that you can think of.

~All advice gratefully received~

[FlamingParrot]

Re: End of the Road for DMP payments- Is DRO way to go?

Working on the premise that your friend's debts are all unsecured debts for accounts defaulted in 2005/06, I would like to suggest another alternative not considered above: challenge the creditors to produce a compliant credit agreement via a s.77-79 CCA request. Given the age of the debts and how long ago they were defaulted, creditors may not be able to provide a copy of the agreement. Without this document, they wouldn't be able to enforce the debts in court, in other words, there isn't much they could do to make him pay. I've got 3 debts not paid since Jan 2010: one couldn't find the agreement, another only found an application form without associated terms, the third hasn't found me yet! :grin: There were letters and phone calls from 2 of them in the beginning but I haven't heard anything since Jan 2012! :dance:

Bearing in mind your friend's accounts were defaulted over 6 years ago, the defaults would have dropped off his credit file. Entering into an IVA or DRO at this stage would mean having a fresh, black mark for a further 6 years and both IVAs and DROs are forms of insolvency, which makes them as 'bad' as bankruptcy. As he has already been defaulted, he can't be defaulted again if he stops his DMP payments and, if it was me, I certainly wouldn't recommend a course of action that would ruin his credit file and also affect his job prospects such as the IVA and/or DRO routes! :nono:

Creditors don't normally just write off debts because you ask them to, there has been the odd case but in most cases, they couldn't care less about your circumstances and will just continue to either pursue you or sell the debt on. Nor are they going to accept 5%-8% in F&F just like that! However, if they are unable to produce a properly executed agreement, they could:

1. Admit defeat and say they know they can't enforce without the agreement but the debt is still due... :blah::blah::blah:
2. Leave him alone after a while as they've done with myself
3. Accept a low F&F, although if the debt is not enforceable, why pay anything? They've had their payments for 7 years now!

My suggestion would be to send a CCA request to each creditor with a PO for £1, by recorded delivery so it can be tracked. The letter should be signed digitally using a computer font rather than his real signature to be on the safe side. They have 14 days to reply. Given the age of the debts, it's very unlikely they will reply within this timescale and not very likely they will find the agreements either. :thumb:

Account No.

I hereby formally request a copy of my Consumer Credit Agreement, pursuant to s.77-79 of the Consumer Credit Act 1974 (CCA1974).

I require you to provide me with a true copy, or reconstituted copy of the credit agreement relating to any account you deem to be mine, together with any other documentation the Act requires you to provide. I expect you to comply fully and properly with this request, within the statutory time limit (12 + 2 days).

If it is your view that you are not the creditor, s.175 of the CCA1974 applies in the case of a simple assignment, and places a duty upon you to pass this request to the creditor. In the case of an absolute assignment, you are a creditor as defined by s.189. If you contend that you purchased the rights but not the duties of any agreement, you are reminded that s.189 of the Act is clear that an assignment is of both rights and duties. Your attention is drawn to ss.5(2), 3(b), 6 and 7 of the Consumer Protection from Unfair Trading Regulations 2008 (CPUTR).

In line with recent OFT Guidance (issued Oct 2010) surrounding Unenforceability, the OFT has stipulated that 'sections 77-79 of the Consumer Credit Act 1974 outline the information creditors must provide to debtors under fixed-term, running account & Hire Agreements'. This simply means that under these sections a debtor can pay £1 to get:

• a copy of their agreement
• copies of some of the other documents mentioned in their agreement
• a statement of account

If this information is not provided within 12 working days the debt becomes unenforceable. This means a creditor cannot:

• make the debtor pay the debt before they're supposed to
• get a court judgment against the debtor

In line with the OFT Guidance, and the Consumer Credit Act, please find attached my £1 payment, which is the statutory fee - note that these funds are not to be used for any other purpose. If you are unable to comply fully and properly with this request, you should confirm this in writing at the earliest opportunity, and certainly within the statutory time limit for compliance, and return the fee.

I look forward to hearing from you within the prescribed time-scales quoted.

Yours faithfully,

[bladerubber]

Re: End of the Road for DMP payments- Is DRO way to go?

Dat is an excellent idea-I had considered it at first then thought 'theyre bound to have it' but who knows -they might not or some might not at least.. thanks for all the details, will recommend to do this step prior to all else.. :nod:

[FlamingParrot]

Re: End of the Road for DMP payments- Is DRO way to go?

Dat is an excellent idea-I had considered it at first then thought 'theyre bound to have it' but who knows -they might not or some might not at least.. thanks for all the details, will recommend to do this step prior to all else.. :nod:

Given the age of the accounts and how long ago they were defaulted, this is not very likely. When you send a SAR you often get just 6 years worth of data/statements and they all argue they don't hold anything older than that. As these accounts were defaulted over 6 years ago, the agreements were probably destroyed or archived in a data warehousing facility in Outer Mongolia! :bounce:It is very likely the accounts are now in the hands of debt purchasers rather than the original creditors, in which case they would have to go back to the OCs to get the agreements, as DCAs buy debts in bulk without any paperwork.

Even if an agreement was found, it may not be compliant, you never know... :grin:

[bladerubber]

Re: End of the Road for DMP payments- Is DRO way to go?

Well strangely enough Only one of the debts has been purchased and very recently, he was notified of that today-its been apx a week since he reduced his DMP payment to a mere £5.00 a month-coincidence?
After telling them he no longer had access to fund to Cash lump sum IVA PayPlan then suggested their 'settlements dept'- who he is now in contact with, They have told him that although creditors would have accepted the IVA (at a mere 11%) they will not settle for anything less than 40%. When he asked why, if the settlement amount is over IVA amount would they not be willing to settle- the answer is unknown.
I presume that full and final settlment is less detrimental than IVA-so they try extract more for it?
Although I have encouraged direct contact-my pal is very hesitant, and so easily stressed he is preferring having PayPlan do his bidding, yet as far as I understand they are not willing to even put in an offer at less than 40%.
He has thought more about DRO-but the question of 'approved pension' is still in the air. It may be a detriment but what other options are there if creditors wont settle and he simply cannot pay anything monthly.

[FlamingParrot]

Re: End of the Road for DMP payments- Is DRO way to go?

Challenging the agreements is definitely worth the stress, IMHO, especially because many won't be able to produce anything and they would be faced with no prospect of recovery through the courts if there is no paperwork. Payplan are a charity but they are funded by the credit industry so they won't get involved with this side of things.

At the end of the day it's a personal decision, whether it's worth paying so much money just to avoid hassles, I know what I would do - or, more accurately, what I'm doing - the hassle runs its course and they leave you alone after a while, I've not heard a peep since Jan 2012!

The most important point here is to remember that both IVAs and DROs are forms of INSOLVENCY, not dissimilar to bankruptcy in that respect. They will be on the public record for some time (15 months for a DRO) and also on the credit records for a full 6 years, and could affect future employment prospects and even the ability to rent a home.

Anything else such as a F&F settlement won't have any effect at this stage because the defaults have already been recorded and dropped off, you can't be defaulted twice for the same account.