A Debt Relief Order (DRO) is often the best debt solution if you have under £30,000 of debt, you are renting and you have hardly any spare money to repay your debts. You don’t have to make any payments in a DRO and, after a year, your debts are wiped out.
The DRO limits described in this article are the new limits that are being introduced from 29 June 2021.
You can’t apply for a DRO yourself, the application has to go through a debt adviser who is an Approved DRO Intermediary. In this article, I just call them your DRO Adviser as it’s shorter!
Most DROs are set up by Citizens Advice, but National Debtline, StepChange and Christians Against Poverty also handle a lot. It doesn’t matter who you go through, the DRO you end up with will be the same.
Because you aren’t applying directly, the process may seem a bit confusing.
The best answer to every question is ask your DRO Adviser – each firm has their own internal forms and methods. They really want you to get through this process as quickly and easily as possible and the more you understand what is happening, the simpler that is going to be.
But if you are feeling anxious, or you can’t get to talk to your DRO Adviser for a few days, here are the common questions I hear about DRO applications.
Contents
Questions about eligibility and suitability
I have covered the DRO criteria here – they are fixed numbers, not rough guidelines, and you will have to meet them all. Your DRO Adviser checks this and won’t submit your application if you don’t.
I’m self-employed, I make little money but it’s erratic
You can have a DRO if you are self-employed. Business Debtline are good people to talk to about your situation as a variable income can make it harder to judge.
My bank account often has a lot more than £75 in it so will the Insolvency Service reject a DRO?
This isn’t a problem. Your DRO adviser will do a proper check on your income and expenditure and if they say you meet the “under £75 spare income a month” test, then you are going to be fine.
I have applied for PIP but don’t know if I will get it
Tell your DRO adviser. If your only income is from benefits, this won’t matter, you will definitely qualify for a DRO. Even if you have other income it may be OK – although your income may be going up, your advisor can include extra disability expenses.
If you get a backdated amount when your PIP application is accepted, this won’t be a problem for your DRO. Backdated “premium” amounts that are added to other benefits when you get PIP can be a problem – talk to your DRO adviser about these.
Does it matter if I went bankrupt 4 years ago?
No that won’t matter.
The DRO Unit of the Insolvency Service will only refuse your application because of previous insolvencies if you:
- are currently an undischarged bankrupt; or
- you are currently in an IVA; or
- you have had a DRO in the last six years.
I’m staying with friends but when I get a place to rent, I will have no money
Applying for a DRO at the moment probably isn’t a good idea! I suggest you save up the money for a deposit and move out. Then you will know what your expenses are and what your surplus income is.
Also it can be simpler to find somewhere to rent without a DRO (or bankruptcy or an IVA) on your credit record.
You may well be right that you will be broke when you have moved, but getting yourself settled is your top priority. Your debts – and any DRO – can wait.
I’m going to retire in about 6 months, what about my lump sum from my pension?
If you get a large lump sum from your pension whilst you are in the middle of your DRO year, your DRO will probably be cancelled.
Unless you can postpone taking your pension until your DRO is completed, a DRO probably isn’t a good option for you. Talk to your DRO Adviser about this and about what your other alternatives are.
My maternity leave is ending in a few months – will this be a problem?
Your income will increase, but you may also get large childcare expenses, cost of travelling to work etc and your benefits may reduce, so you may still meet the DRO criteria. You need to talk this through with your DRO Adviser.
If returning to work will be a problem for your DRO, then you may have other alternatives eg part time work for a few months until your DRO ends
Questions about income, assets and expenses
I don’t have any bank statements – does this matter?
Your DRO Adviser will want some proof of your income – if they ask for bank statements and you don’t have any, it’s usually easy to get one. Or they may be happy to accept wage slips and any benefits letters. The Insolvency Service doesn’t need to see your bank statements.
Are student loans treated as income when applying for a DRO?
Student maintenance loans and grants count as income for a DRO. The loan you get for tuition fees is ignored.
If you are going to uni as a mature student, a DRO may well be a sensible option for you.
Why do I have to say what my partner earns?
A DRO won’t be refused because your partner earns a lot – they aren’t going to be told to pay your debts. You are only being asked about their income so that it can be checked that your rent and bills are being fairly divided between you. If you earn the same, a 50/50 split would be normal.
We are both going to need a DRO – how do we divide up the expenses?
Expenses are usually divided in the same ratio as your income. So if you both have about the same income, you spilt the rent, council tax, and all joint household bills 50:50. If your income is twice what your partner’s is, you would be expected to pay 2/3 of the bills and your partner 1/3.
But you don’t have to sort these numbers out, get the same debt adviser to do both DROs and they will do all this.
My parents have been giving me money to help with my debts
Those are gifts and they could stop at any time. They don’t need to be reported on your DRO application as income because they aren’t income.
Is my car worth what I can sell it for?
You can get a valuation using Parker’s Guide, This gives a range of values for your car – talk to your DRO adviser who may agree that the bottom end of the range is likely to be acceptable.
I have a car registered in my name for insurance, but it’s owned by my mother – what will happen?
Tell your DRO Adviser but this should be fine. What matters is who owns the car, not whose name is on the insurance or the V5 registration. You will probably need to provide some proof about who bought the car.
I’m unemployed and I pay my mum £30 a week for rent and board – is this allowed?
That isn’t going to be a problem – it would cost you far more to rent a room privately somewhere else!
I’ve made an affordabilty complaint – should I delay until this is sorted?
Possibly but unless the refund will be large, it may be best to get on with the DRO now. Read “If I get a refund, what will happen to a DRO?” which looks at this in detail.
Questions about debts
Why do I have to get my credit reports?
You are being asked for a credit report so that your DRO Adviser can be sure all your debts are being listed. This is for your own protection – any debts which are not listed on your DRO application are not included in it and so you will still have to pay them.
What details are needed about the debts?
Who the current creditor is, the amount and the reference number. If there are several reference numbers – the original credit card number, a debt collector account number and another number on your Experian record say – list them all to be on the safe side!
Do I have to include my broadband/mobile/car insurance contract which still has over a year to run?
These are “service contracts” – you aren’t repaying a loan, just paying for a service, eg supply of broadband, throughout the year. You don’t generally have to include service contracts unless you are behind with the payments – in that case they do have to be included.
But you need to check with the adviser setting up your DRO that the payments will be allowable as an expenditure.
With a mobile contract, it may be set up as part loan and part service contract. In this case is it usually possible to include the contract in your DRO but keep the handset and then get a PAYG sim-only contract. Talk to your debt adviser about this.
I stopped paying most debts ages ago but still pay two catalogues – is this a problem?
Technically this is called “preference” – paying some creditors and not others. That may sound alarming, but it’s pretty common. Although the DRO Unit can refuse a DRO application if this has happened, they assess how serious the preference was. Most people don’t have a problem:
- if the preference was a while ago and before you took advice about a DRO, it matters a lot less – so from this point you must treat all your debts equally. For most people this means not paying anything to any of them. BUT don’t stop paying any priority debts without talking to your DRO Advisor first!
- if you had been paying a family member or a friend and not paying commercial debts, that is seen as more serious.
Talk to your DRO Adviser – they may not be concerned or they may suggest putting off a DRO application for a few months so the preference is further in the past. But if you have problems with bailiffs or other urgent reasons it may still be good to apply now.
I used my credit card last month – is this a problem?
This is another common situation. It does depend on why you used credit – paying for an essential car repair is much less of an issue than taking the family to Disneyland!
A DRO application won’t be refused because of this, but it is possible that some extra restrictions may be imposed if the DRO Unit thinks you have behaved recklessly.
Talk to your DRO Adviser. Some DRO Advisers don’t like putting in an application unless you haven’t used any credit for several months, but if the amount was small, or for an urgent need, you may want to carry on with it. Once you have decided to apply for a DRO you should not use any more credit.
I have a car on HP – is this a problem?
You have to talk to your DRO adviser about this as it can get complicated. Briefly:
- any arrears on the HP have to be listed as a debt in your DRO;
- if you don’t have arrears, the HP doesn’t have to be listed and then it doesn’t count towards the £30,000 debt limit;
- the car finance company may sometimes choose to end the agreement and repossess the car even if it is not listed. (This also happens in bankruptcy and IVAs.)
- your DRO has to decide if your future payments to the HP will be an “allowable expense”.
Of course if you don’t want to keep the car, you can hand back the keys and then list the debt in your DRO so it is wiped out.
I am repaying a Universal Credit advance – can this be included?
Yes, it can. UC Advances are debts that should be included in a DRO. When the DRO is approved, any deductions from your current benefits for these should stop.
This also applies to benefit and tax credit overpayments. But it does not apply to Social Fund loans – these cannot be included in a DRO.
I’m confused about rent arrears
Rent arrears are a debt that has to be included in your DRO. But if you are still living there, you are allowed to carry on repaying the arrears and if you don’t, the landlord or Housing Association/Council may try to evict you.
Talk to your DRO Adviser about this – it’s important you get an affordable arrangement in place to repay your rent arrears in place.
This is one case where going to your local CAB for help with a DRO is good as they may know what policies local Housing Associations have.
Questions about how long the application takes
When my local CAB has checked my DRO do I then apply to the Insolvency Service?
No. Only approved intermediaries can submit an application for a DRO, you can’t do this.
Your DRO Adviser gets the information to go on the application from you and your credit records. You then have to sign to authorise them to send in your application.
I’m about to pay the £90, has my application already gone in?
No. You will have been sent the letter with a barcode on it to pay the fee. The fee goes to the Insolvency Service. You then need to tell your DRO Adviser you have paid this and at that point they submit your application.
How long does it take to approve a DRO?
It’s quick! Your DRO Adviser will usually get an email a couple of working days after submitting the application to say it has been approved.
The letter to you confirming this, called the Debtor’s Notice, is posted the same day your DRO Adviser is told, so you usually get it the day after. It’s a good idea to keep this letter safe, even when your DRO has finished, because it proves what debts are included in your DRO.
The Insolvency Register is also updated, showing your DRO.
How many DROs are rejected?
Only a tiny number of DRO applications are rejected – less than one in three hundred applications.
If your adviser has agreed to put your application forward, it is because they have already made all the checks and they don’t expect any problems.
How long do creditors have to object?
Creditors don’t have to agree to your DRO, there is no set time at the start for them to approve or object.
A creditor can only object if they think you didn’t meet one of the DRO criteria. This doesn’t happen very often, and then the DRO Unit have to consider if the objection is accurate – most of them aren’t. It is VERY rare for there to be a problem with this – you don’t need to worry about it.
I am just about to pay the £90 and I have been told one of my debts has been sold
Tell your DRO Adviser – they may want to change the application. This isn’t a problem, it’s just a bit of a hassle.
I’ve paid my £90 DRO fee two days ago and I have had a letter from a bailiff about council tax
From this point it should be very quick, so you could simply ignore this letter, but tell your DRO Adviser and make sure your application has been submitted.
If a bailiff calls, do not open the door under any circumstances, not even to explain about your DRO. See Do I have to let a bailiff in?
Other questions
Do I need a new bank account?
If you have an overdraft, it will be one of the debts in your DRO – you can’t leave it out. You will need to get a new bank account, but there is now a good range of basic bank accounts to choose from, see Getting a basic bank account.
If you don’t have an overdraft, you will usually be able to keep your current account. Your bank isn’t told you have started a DRO. Anecdotally NatWest and Halifax sometimes make you downgrade to a basic bank account from a standard current account.
Who is told I have a DRO?
Your creditors are told, your name is included in the Insolvency Register (which lists people with bankruptcy, IVAs and DROs) and a marker will be added to your credit record.
There is a procedure to not include your address on the Insolvency Register if you have had domestic violence or similar issues – talk to your DRO Adviser if you are worried about this.
Your partner isn’t told – but it is always a good idea to tell them yourself!
Your employer isn’t told unless you owe the employer money or unless you have an attachment of earning in place (which will stop) your employer isn’t contacted.
Your landlord is only told if you have rent arrears.
Will a DRO affect my partner’s credit record?
Only if you have a joint bank account or loan with them.
Do I have to send in monthly statements?
No! No one checks up on your income and expenditure during the DRO year. Or at the end of the year.
If this sounds unlikely, think about how low the fees are… Your £90 isn’t going to pay for anyone to be looking at your bank statements each month!
Can I move abroad?
Yes – tell the DRO Unit your new address and you will still have to inform them of changes to your income and expenses.
No such thing as a foolish question
I hope I have covered many people’s questions here. But tell your DRO Adviser about any concerns or questions that you have. Not just about your current situation and the application process, but about what may happen in the next year. It’s better to have this discussion before an application goes in!
Can I leave a debt out of a DRO?
Do debt collectors still phone after a DRO?
DROs and your credit rating
Jay says
Yes I will still be contributing to the running of the car and I use it to do the school run, get to work and collect and drop my child off when they stay…so would they still include this in the calculations?
I have around 19000 of debt and no rent arrears and no debts that aren’t included in the DRO.
I am currently not paying anything towards debt as I have wrote to my creditors asking for a payment suspension and have a 30 day payment holiday in place.
I was wondering with a cash sale of the car, would they expect me to put that towards the debt? Ideally I need the money just for living expenses. Thanks
Sara (Debt Camel) says
can you say what living expenses you need this for? (I’m not disputing it, just looking for what to suggest).
Jay says
It would be for rent, child maintaince, bills etc day to day living. If I sold my car before I applied for the DRO would this make a difference as I haven’t applied for it yet.
I wasn’t sure if they would ask where the money from the sale of the car has gone…in my eyes you could have already spent it on rent etc.
Sara (Debt Camel) says
The debt adviser setting up your DRO will probably look at your last few months banks statements. If the money has gone on essentials, that is unlikely to be queried. Amounts being given away to family or a holiday would not be essential.
You can have money in the bank when you apply for a DRO. You are allowed up to £1000 in assets. You don’t have to include everyday household items in that – even a new laptop probably has a low second hand value. So you could say aim to have more than £500 in the bank – that will make the next years easier to get through.
I suggest you talk to a debt adviser now about this – phone National Debtline on 0808 808 4000. I don’t know your full situation and this isn’t something you want to get wrong.
Sam says
Hi I’ve just been approved for my dro my debts total to over 19 and a half thousand I have my 02 phone on there which I thought in total was the correct amount today I received a letter from 02 stating I owe them the final bill although I was totally unaware about this I told them I have a dro but they are saying that only covers the handset not the line rental what do I do, i think it may be 100 150 over the original debt on my dro can someone please help it’s got me very worried as I don’t want my dro revoked because of them adding on more figures then the original amount
Sara (Debt Camel) says
Go back to the adviser that set up your DRO about this. Sorry, your adviser knows all the details and there isn’t any point in me guessing.
Sam says
Thank you for your reply Sara I’ve just spoke to 02 and I’m only 1 pound over 😅 they said the pound won’t make any difference as the figure is basically correct on my dro just missing one pound
Sara (Debt Camel) says
excellent.
Sam says
Hi my partner has a DRO in England and has been offered work in the Republic of Ireland, could you offer some insight as to what would happen if he moved there? Thank you!
Sara (Debt Camel) says
You can leave the country with a DRO and also work abroad. He should tell the Official Receiver about the new job and his changed expenses – different rent, bills etc. If this means he has too much “spare income” then the DRO may be cancelled – it would be a good idea for him to talk to the adviser that set up the DRO about this possibility now, before he accepts the job.
James says
Hi I am looking at apply for a DRO but would like to try and keep my overdraft and PayPal credit facility for future emergency and budgeting use.
Can I clear the balance of my overdraft etc with my credit card before apply for the DRO so I have a chance of keeping them?
Sara (Debt Camel) says
Can I clear the balance of my overdraft etc with my credit card before apply for the DRO
No.
And even if you do clear the overdraft the bank may close the account.
I suggest you plan to start afresh with no overdraft. The charges are lethally high, not an aid to budgeting.
rachel says
Hi sara,
i am looking into getting a DRO but i have been turned down due to the fact i am on universal credit (and by the end of september the £80 a month uplift will be scrapped) the advisor is telling me that my budget will therefore not be correct and has referred me for bankrupcy instead based on this. This seems unfair and i would also assume this applies to everyone on UC? is it worth looking to another provider as i would like to avoid bankrupcy if possible. Thank you
Sara (Debt Camel) says
that is very odd advice – who told you that?
Rachel says
Hi Sara
I believe it was PayPlan. I thought the same. Seems very unfair
Sara (Debt Camel) says
very odd. I suggest you contact National Debtline who do a lot more DROs than Payplan and talk to them about a DRO.
It is of course better if you have a budget that “balances” and the possible decrease in UC may leave you in difficulty. But that is not a reason to prefer bankruptcy to a DRO!
Rachel says
Thank you! I will do that
Hatch says
Hey!
My DRO was accepted 4th of May and all account totals were correct when it was sent off to be considered 29th of April. The bank I hold a loan with; is included in the DRO. Has the account balance at £150 more than the total I provided. Once my DRO is completed, will I be expected to pay the difference or should I just keep quiet and hope for the best as the letter they sent me merely states that they need to notify credit references and still provide me statements… “however, as long as you keep to the terms of the debt relief order, you don’t need to take any action.” Its money we don’t have as the overdraft was in a joint name and will still be coming from our joint income, just my OHs account, as we’re both currently unemployed. Thanks in advance for any advice you can give me.
Sara (Debt Camel) says
Unless this extra £150 would take your DRO debt total over the £20,000 limit, this isn’t usually a problem. I suggest you tell the adviser who set up your DRO about it.
BUT what is your husband’s debt situation? Can he manage all the repayments?
Hatch says
Hi again, it wouldn’t take me anywhere near the threshold thankfully I just didn’t want to plead ignorance over it if they’re going to tail me down for it despite the DRO or whether the bank will just accept it as being included in the DRO?
Everything was in my name so the repayment for the overdraft will be manageable, albeit lower and slower than they might like.
I remember seeing that they can’t add on extra amounts to the DRO once it’s in place so I wondered how it would work with situations like this where the charges were added mere days before it was accepted. Am I just better off leaving it alone and not mentioning it to the bank, that I actually still owe them money as I’m still not allowed to pay anything towards it for the next 12 months so it wouldn’t benefit me to do so for the small amount they could claim over me?
I do need to add, both the overdraft and the loan were frozen up until the 21st of June so they shouldn’t have applied monthly charges to the loan anyway?
Sara (Debt Camel) says
Please talk to your DRO adviser. It is usually pretty easy to get small changes in the amounts of debts that were listed in your DRo corrected. The DRO adviser may not even think anything needs to be done. But it would be good for you to know.
Hatch says
I was under the impression that once a DRO is accepted you can no longer make changes to it? Hence my query.
Sara (Debt Camel) says
You can’t add a debt to it that has been missed off. but please talk to your DRO adviser.
Laura says
Hi,
My DRO has just been approved. I didn’t have an overdraft on my Lloyds bank account but I do have a credit card with them which is listed on the DRO. Lloyds today have frozen my account, I can’t get to any of my money at all. I phoned them and they’ve said I have to go into branch to withdraw as my account is now closed.
Is this normal? Can they withhold my money?
Thanks
Sara (Debt Camel) says
Lloyds often close all bank accounts when someone has gone bankrupt, had a DRO or IVA.
You need to open a new basic bank account with another bank – luckily there is now a good choice of these, see https://debtcamel.co.uk/bank-accounts-after-bankruptcy/
No they shouldn’t withhold your money. A DRO is not like bankruptcy where the Insolvency Service asks for accounts to be frozen, this is just Lloyds being difficult.
Laura says
Thank you so much for the quick reply! You have reassured me that I can go to Lloyds on monday.
I had already opened an account with NatWest and I’ve arranged my wages to be sent there too. I’ve just noticed that they aren’t on that list of accounts- do you think this account will be okay?
Sara (Debt Camel) says
NatWest are on that list, under RBS. I think that should be fine – let me know if you have problems?
Jensen says
I am about to apply for a DRO –
A Few months ago I received £6000 for my children as inheritance from their great grandfather. Obviously this shows on my bank statements. Is this going to cause an issue? It was less than 3 months ago.
Thanks
Sara (Debt Camel) says
so it has been moved out to bank accounts in their names? They were names in the will?
Jensen says
Hi, no this was a verbal request from my grandfather to my Nan & Father to arrange. This was deposited via cheque in to my account. I do have a letter from my father as executor of my grandfather’s estate, that states this is a one time gift for my children & as such to only be used for the children. Having spoken with Payplan they seem to think this should suffice. However I do not want to pay £90 for my application to be rejected.
Thanks for the swift reply.
Sara (Debt Camel) says
If Payplan are setting up your DRO and they say it is OK, then follow their advice!
Jensen says
Thanks again.
Can they use our bank statements as a reason to not offer a DRO? We have spent a fair amount on things that maybe aren’t classed as essentials. However we wouldn’t be in this situation had we been ‘sensible’ with money in the first place.
Sara (Debt Camel) says
Not because you have been buying inessentials, no, that is not a reason to refuse a DRO.
But two points.
If the Insolvency Service thinks you have been reckless, then you may get a Debt Relief Restriction Order. But these are rare – many people worry they have been foolish before a DRO and don’t get one. Also in practice one doesn’t make a difference to most people’s lives. See https://debtcamel.co.uk/bankruptcy-restriction-order-bro/ which looks at BROs and DRROs.
Your debt adviser will look at how much spare income you will have a month on a sensible spending pattern.
Hannah says
Hello, I’m thinking to apply for DRO, the thing is I’m not behind with payments as I work but I have zero income left over once all the money has gone on my debt, I have big childcare fees now too as I have a baby who’s in nursery. I was wondering if I’d be eligible, I’m getting the impression that most people applying have stopped making payments to their debts. I’m making the payments and just leaving myself with nothing. Any advice would be great as I’m feeling sooooo stressed. Thank you!
Sara (Debt Camel) says
You can get a DRO if you are still up to date with payments.
You need to talk to a debt adviser about a possible DRO and your other options – I* suggest you call National Debtline on 0808 808 4000.
colin says
Hi, what can I do if I have debt in a Ltd company which effectively stopped trading with the first lockdown? I now work as a self employed handyman. I’ve read I can’t obtain a dro if I’m a director of a company. Can I dissolve the company with debt and then apply for a dro for my personal debt?
Sara (Debt Camel) says
Talk to Business Debtline – they will explain what you need to do: https://www.businessdebtline.org/
Colin says
Thank you!
Liam says
What counts as an asset please?
My income is maxed out each month and having to reduce my hours from September due to a health condition, I would probably lose my job if I didn’t. I didn’t want to stop making payments to my creditors until my hours reduced but I also feel like I don’t have any spare income at the moment although would if I stopped paying creditors which would help in the time ahead when my hours do reduce. Is it ok to stop paying and put through my DRO in September. Having discussed my incomings and outgoings with step change I would be eligible for a DRO.
I’m also concerned that I have spent on credit cards recently. i actually withdrew cash that I desparetly needed at the time and am basiclly at my limit. Is it likely I will get restrictions for this?
Thank you.
Sara (Debt Camel) says
I am glad you have talked to a debt adviser – your previous hope of getting through with an expensive debt consolidation loan looked unlikely to work, especially if your health was a problem.
It takes a couple of months to set up a DRO, so if you start the process now with StecHange it can be ready to go when your income falls in September.
An asset is something valuable you own. Not your clothes or everyday household furniture. It is the second hand value that matters, not what you originally bought it for – so what you could sell something on ebay for. IS there anything in particular you are worried about? It is unusual for the asset limit to be a problem in setting up a DRO.
If you have been having to withdraw money on a credit card, then that sounds like you cannot afford to make the normal repayments to your debts, What did StepChange say? In the run up to a DRO it is important to treat all your creditors the same – pay them all in full, don’t pay them anything or offer them all £5 a month… You should also stop using the credit cards… StepChange should have suggested what you should do?
Obviously I don’t know what you have been spending the money on that meant you had to take cash out. If it was going on essentials and paying off other debts, I would be surprised if you get a restriction – they are pretty rare. Almost everyone going for a DRO or bankruptcy thinks they made some foolish decisions – that doesn’t mean you will get a restriction – see https://debtcamel.co.uk/bankruptcy-restriction-order-bro/
Liam says
Yes, shortly after speaking with you I went off sick for 2 months and due to return on Monday. It’s not been a fun time either.
I withdrew money on a credit card for gambling on 2 occasions £100 on one card and £150 on another. It was stupid of me but was struggling to pay for a few things and then had to subsequentally take a payday loan out. That’s my worry. It’s a silly situation I know. I won’t be doing it again.
I won’t be using the cards again.
I spoke with stepchange and just went through a dummy run to see if I would be eligible with my incomings and outgoings but never went through everything as I wasn’t sure of my situation at the time but I think it’s for the best.
Assets – It’s more like my son’s Nintendo switch that was from Father Xmas (he’s 5) but was part of a mail order account last year on BNPL and a 2nd smaller fridge for the conservatory purchased at the beginning of the year.
Sara (Debt Camel) says
So these are small amounts of cash on gambling – they haven’t contributed a major part to your insolvency. And the second hand value of those “assets” is not going to be large – and they were bought before you went off sick for two months, at a point you were expecting to be fine without insolvency.
This is never totally predictable but I would be surprised if you get a restriction.
I suggest you phone StepCHange and say you would like to proceed with a DRO in September, can you strat the process now, and ask what you should be paying your creditors until it is set up.
Liam says
Thanks Sara. I have spoken with stepchange and advised me to gather all my debts up first and then once we know everything, look at the options with a view to putting a DRO through in September (if that’s what is decided) and to possibly be able to put a hold on the other debts. I will call around on Monday.
Thanks again.
Liam says
So I have now been put on to Breathing space after completing all the information, Stepchange were really helpful and found this process very simple. This has helped me ensure I can have that time to weigh up all of my options and have confirmation from my work as to my hours.
If people are struggling with what to do then speaking to stepchange and if eligible and the circumstances suit, taking breathing space for 60 days, is very helpful.
Amy says
Hi I’m in a DRO can’t find anywere if I’m Abel to get out a phone contract?
Sara (Debt Camel) says
If you want a new handset, then the contract normally involved paying for the handset “on credit” over the term of the contract, typically 2 years.
There are two problems.
According to the terms of your DRO, you can’t get credit of more than £500 without informing the lender about your DRO.
And second, a lender may reject an application because of your bad credit.
If you have a handset, getting a sim-only 30 day contract is often the best option.
Liam Attrill says
Hi Sara,
I have a similar question on that. I am currently on a phone contract with vodafone. I will be looking to enter into this DRO in September. My work have not been able to offer the reduction in hours I was hoping for and had to hand my notice in, as I can’t continue the way things are (I am now off sick again with lower back issues, muscle spasms etc..).
I have done a budget calcualtion based on our outgoings to include my wifes wages and any potential benefit amount I am likely to receive and lilterally having to break even each month, there or thereabouts (that’s the reason for the DRO I guess). I need to somehow make some further cuts. The only thing I can see is to not have to pay my Vodafone bill of £44pm and look to get a pay monthly sim that my wife could take out, which is much cheaper. I am not in debt with vodafone yet, so would I have to not pay them this month to then be able to add them to the DRO?
Thanks as always.
Sara (Debt Camel) says
That sounds like a sensible way forward. If you want a DRO in September, start talking to an advice agency now as they take time to set up.
Liam Attrill says
Thanks Sara. Yes, I am currently on breathing space with a view to enter into this dro via step change.
I’m hoping I can find some part time work within the nhs before the end of September, which will at least give some extra income but I’m just looking at worst case scenario of course.
Thank you for your help and advice
Liam Attrill says
Hi Sara, I’ve just received a response from the adjudicator at the fos to advise loans at home to pay me the interest etc for 3 out of 4 loans. He has asked them to respond by 26th august with any additional evidence or ask it to be looked at again if they wish.
How long does that take with regards to a layout if they go ahead with the decision do you think as I’m worried how this may affect my dro. It won’t be more than £1000 I would imagine.
Am I ok to still receive that when it’s paid if in a dro or is it worth holding off considering my assets won’t total £1000 when I go into the dro?
Thank you.
Sara (Debt Camel) says
You HAVE to know what your possible refund from Loans at Home would be before you make a decision on the DRO.
DO you know the details for the three debts the adjudicator has said to refund – what you borrowed, what you received in cash if the loan was a top up loan, how much you paid in monthly payments?
presumably, they are the last three? Do you still owe a balance on the last one?
Liam Attrill says
I do but I’m not sure what you can take from it
Weekly Rate Weeks to Settle Capital Charges
£10.00 70 £400.00 £350.00
£15.00 14 £375.00 £300.00
£10.00 1 £200.00 £130.00
It’s looking to be a lot less like £4-500
Sara (Debt Camel) says
I am not sure if that last column is the interest and charges you actually paid. Or the ones that were quoted at the start of the loan. Do you know?
They add up to £780. There should be some 8% interest on top, depends how long ago the loans were.
Getting a windfall of up to £2000 is ok in a DRO. It does depend a bit on what assets you had at the start but if you are well under 31000 (and most people are ) you should be OK.
Liam Attrill says
Unfortunately they are the charges I who’d have paid, not what was paid. Hard to do a calculation based on that. I’m assuming it’s under £500 in total.
Do loans at home take long to arrange payment?
Assets will be around £500 I think max
Sara (Debt Camel) says
I suggest you ask LAH how much interest and charges you paid on the three loans. I’m sorry but I don’t see enough details of LAH cases to be able to make a safe guess.
Nor do I know how long they take to pay – but first they need to accept the deciaion.
Liam Attrill says
Thank you sara
John says
Me and my partner doing a dro after our two months of “breathing space” . Citizens advice said we just met the “less than £75 left” criteria on my basic wage, but that was two months ago and since then I have had to do £200 worth of overtime a month at work on a temporary basis due to short staffed because of Covid, so when we hand my wage slips in they will show we have more money coming in than two months ago, but like I say the overtime is temporary so will this effect chances of a dro thanks
Sara (Debt Camel) says
does your partner work?
you need to explain the situation to your DRO adviser – they may want to wait a couple of months and see if the overtime continues.
Louise says
Hi Sara, I have done a budget with National debt line but I have a car on PCP, the payments for my car are all upto date and I need this to commute to work and for everyday travelling, I have fibromyalgia and find it difficult to walk any distance, it would cost me more to hand the car back, the car finance said they are happy for me to carry on paying for my car if I can get a (non adoption letter) from the DRO , however NDL are not sure if my car will be accepted has an essential.
Can you advise on this please
Sara (Debt Camel) says
are you getting any disability benefits?
Louise says
No not at the moment, I have however received a pip form which I need to complete,
I was unsure though if I did get awarded pip if this would take me over the £75 allowed
Sara (Debt Camel) says
Have you told your debt adviser you are applying for PIP? Getting PIP itself wont take you over the £75 limit if you are currently under as you can include a line in your expenses for “disability costs” – your adviser will explain this.
But it would help to show why you need the car. Also ask your debt adviser if getting a letter from your doctor would show you need the car now.
Louise says
Hi Sara So on the original question regarding the car on PCP would this be something that would not be acceptable unless I was successful in a pip application
Sara (Debt Camel) says
I don’t know why National Debtline think it isn’t essential. I am suggesting you tell them it is needed because of your disability, say you are applying for PIP and ask if a letter from your doctor now would help them say it is essential.
Anita says
Hi, can you tell me if Special
Guardianship Allowance is classed as income when applying for DRO?
Universal credit don’t count it as income and I don’t have to file tax returns as self employed.
I have a DMP that was recently increased, but my benefits will decrease by more than my DMP payment this month.
Sara (Debt Camel) says
Yes it is counted as income, but you can include the associated costs of looking after the child as expenses.
How much are you paying to your DMP at the moment? Your income is going to drop because of the UC cut, any other reason?
Ann says
I have just been told in a webchat with National Debtline that the insolvency service needs to see all bank statements but your website says “The Insolvency Service doesn’t need to see your bank statements.” Could you confirm which is correct please?
Sara (Debt Camel) says
Your DRO adviser will want to see your bank statements.
Ann says
Thank you, however, I have been told today by National Debtline that the bank statements will be sent to the Insolvency Service with the application and other documents needed for the application. Please could you confirm if this is correct?
Sara (Debt Camel) says
If that is what they say they send, then that is what they attach. Does it matter?
Catherine says
Hi,
If i set up a DRO for myself, will it effect my 14 year old’s bank accounts too?
Sara (Debt Camel) says
You can’t set up a DRO for yourself, it has to be done by a debt adviser. (You probably already knew that, but it’s worth making clear, just in case.)
Your child’s bank accounts are not affected unless you have been making unusually large payments to them. Talk to a debt adviser about this – I suggest National Debtline on 0808 808 4000 – but this isn’t usually a problem.
Dee says
Hi,
I have a credit card debt that I took out about 2 years ago. I paid it for the first 9 months or so until I ran into trouble. However, I lied on the credit application and said that I had a job, when I didn’t. The debt has since been sold on for non payment.
I want to clear my life up honestly so I can start again. Can you advise me if this information will need to be revealed? Or what I might be asked about this?
Thank you
Sara (Debt Camel) says
How large is the this debt? Do you have a lot of other debts or arrears on bills? It sounds as though you ran into trouble during COVID-19 time.. was that partly responsible for your problems?
Magdalena says
My DRO was approved last year on january. I read that they are some changes like spare money you can be left with is 100 not 50 a month. Will new rules apply to me now or previous ones when I applied?
Many thanks for any advice
Magda
Sara (Debt Camel) says
it is the new rates that apply, but that are £75 a month not £100 a month. See https://debtcamel.co.uk/dro-income-up/
Are you in work? getting Universal Credit?
Many people’s energy bills will be going up – that will reduce the amount of “spare” income you have.
Toni says
Hiya im currently going into a dro and my sister is thinking about it to but she’s worried that she’s going to loose her tenancy and has only been living in the property not even a month yet but she isn’t behind on rent or have any rent arrears will this affect her tenancy and also she has a studio account which she’s been paying just fine each month as it’s only £10 a month and that’s for her daughter who’s 2 and for Xmas and she’s worried she has to put that into her dro please can you help
Sara (Debt Camel) says
If she doesn’t have any rent arrears, she should not have any problems. She should talk to a DRO adviser about this who will be able to reassure her.
But she will need to include all debts including the Studio account.
Perhaps her daughter won’t have so many Xmas presents – but at age 2 she won’t notice… and then your sister will be able to save up some money and buy next years Xmas presents with cash.
Larah says
Hi
I had previous debt with one of my Halifax accounts, but they sold off the debt to link. I have 7 accounts with Halifax one current and the rest kids savers. I technically owe them no money. Will they try to freeze the accounts? What’s the best thing for me to do?
Sara (Debt Camel) says
Is that your main account?
Marie says
I have seen in the news there is a possibility that all those on legacy benefits may receive a backdated lump sum of around £1500 if the discrimination case regarding the £20 extra for Universal Credit recipient is successful. I’m currently in a DRO and am on ESA (support group component) and also receive housing benefit – these are my only source of income. I understand it’s classed as a windfall so would obviously declare it to OR if did receive but what are the chances of it affecting my DRO? I don’t have any other assets and I know the limit is £2000 but it could be nearer to that by the time the court case goes through etc. Also – do they open up the whole case again and want evidence again of current income or statements etc or would they just take this information separately and base a decision on that? I have mental health issues and was very affected by having to sort everything I needed to provide with this so just want to be prepared in case
Sara (Debt Camel) says
If this happens (and I do not want to get your hopes up that it will) then the Insolvency Service may well take a policy decision about whether it should disregard these payments.
There has also been a recent legal case saying that where a DRO has been revoked (the legal term for ended because you don’t meet the criteria) then someone is entitled to apply for another DRO. At a guess the Insolvency Service would not want this to happen to hundreds, possibly thousands of people.