Unsure whether to do a DRO

[stefanieburton]

Hubby has debts of approximately £11/12k (these include ones on his credit file that aren't currently being chased but only defaulted in oct 2011 so still time).

He is currently unemployed, has a van in his name worth (online valuation) £895.

2 of these debts are from self employment as a sole trader (1 is being paid through a judgement, this judgement isn't recorded on any CRA files either which seems odd but is owed).

Now he wants to clear it all up once and for all for a fresh start, we were sorting out offering payments and we've noticed this option of DRO which seems more suited as we only have approx £50/70 spare per month to share, we do struggle on my income.

Were just after some advice on it all, whether it is worth doing? Would we lose anything we own? Our washer/fridge and sofa are on hp in his name which are all cleared end of this year does that have to be included? How would it affect his rating as end of 2016 he will have 8 defaults come off his file?

Hope it all makes sense and thank you.

[Kati]

Re: Unsure whether to do a DRO

Do you own your own home?

[stefanieburton]

Re: Unsure whether to do a DRO

No, its housing association and tenancy is in my name.

[stefanieburton]

Re: Unsure whether to do a DRO

Any advice?

[Kati]

Re: Unsure whether to do a DRO

It would have to be your decision ... have you gone through your options with someone at your local CAB? They'd be able to tell you if it is a viable option :tinysmile_twink_t2:

[FlamingParrot]

Re: Unsure whether to do a DRO

Hubby has debts of approximately £11/12k (these include ones on his credit file that aren't currently being chased but only defaulted in oct 2011 so still time).

He is currently unemployed, has a van in his name worth (online valuation) £895.

2 of these debts are from self employment as a sole trader (1 is being paid through a judgement, this judgement isn't recorded on any CRA files either which seems odd but is owed).

Now he wants to clear it all up once and for all for a fresh start, we were sorting out offering payments and we've noticed this option of DRO which seems more suited as we only have approx £50/70 spare per month to share, we do struggle on my income.

First of all, a DRO is a form of insolvency similar to bankruptcy, the consequences of opting for any form of insolvency should be borne in mind. For example, he may be asked whether he's ever been insolvent when applying for insurance and the insolvency records are public and can be searched by anyone, unlike credit files. His affairs will also be subject to scrutiny by the Official Receiver once he's entered into a DRO. This means having to disclose details about any income or money received.

How much of those £11/£12k are in debts that are not being chased and how much is subject to judgment?

The requirements are:

• Debts below £15,000 at the time the application is approved.
• You should not be a home owner.
• The total value of your assets (excluding a car or motor bike) should be less than £300. Lots of basic household items such as cutlery, crockery, cookers, televisions, beds or furniture do not count as assets. The value of your assets is calculated based on resale value, not how much the item was worth when you bought it, unless it is brand new.
• The value of your car should not exceed £1,000.
• Spare monthly income after normal household expenses should be less than £50 a month

To apply he has to go through an approve intermediary who will assess eligibility and apply on his behalf. Applications are sent directly to the Insolvency Service without the need for a court hearing. The fee to process the application is £90 and is not possible to apply for remission.

Approved intermediaries include:

• Citizen Advice Bureaux (CABs)
• National Debtline
• Debt charities such as Stepchange and Payplan
• The Insolvency Service has a list of competent authorities

[FlamingParrot]

Re: Unsure whether to do a DRO

Were just after some advice on it all, whether it is worth doing? Would we lose anything we own? Our washer/fridge and sofa are on hp in his name which are all cleared end of this year does that have to be included?

If he's not in arrears the HP debts can be excluded from the DRO application. If he is in arrears, they have to be included and any further payments to the creditor must stop. Some HP agreements may contain a clause allowing the creditor to end the agreement if you get a DRO.

If he's not in arrears, he may decide to leave out the HP agreement from the DRO, bearing in mind that payments towards the HP debt will only be allowed if the items are necessary to satisfy basic domestic needs. In this case, the items you mention would be regarded as necessary. :thumb:

How would it affect his rating as end of 2016 he will have 8 defaults come off his file?

Hope it all makes sense and thank you.

It would affect it badly as the DRO would remain on his credit file for 6 years from the time it's approved, in this case til 2021!