People sometimes want to leave a debt out of a Debt Relief Order (DRO). A DRO is a form of insolvency with very strict criteria – it is explained in detail here, including looking at the pros and cons.
You can’t normally choose to leave a debt out, but this article looks at when this is possible and what happens if a debt is left out by accident.
The DRO limits described in this article are the new limits that are being introduced from the end of June 2021. So if you are applying for a DRO now, they will be the ones that are relevant for you.
Why not include everything?
As the DRO is going to clear your debts, the starting point should be to get rid of them all! Some of the reasons people give for wanting to leave a debt out include:
- it’s an overdraft and you don’t want the bank account closed and have to open a new one
- it’s a credit card with very little debt and you would like to keep it for an emergency
- including the debt would push the total balance over the £30,000 limit
- it’s old and you aren’t sure of the details
- it’s a HP loan and you want to keep the car / furniture etc.
Trying to keep your debts under £30,000?
The main principle – include all debts
The fundamental principle is that all eligible unpaid debts should be listed in the application for a DRO. This applies to debts which are not on your credit records.
There is no discretion to leave debts out just because it would be more convenient.
That rules out (1) – this isn’t something to worry about though, it’s now pretty easy to get one of the new-style basic bank accounts. There are great – you won’t be charged even if a direct debit is rejected. You can also have internet banking, contactless cards etc. See Getting a Basic Bank Account for a list of accounts to choose from.
It also covers (2) – you need to think about putting aside a bit of money for emergencies. Even £20 a month can add up and make all the difference.
(3) won’t work – you can’t omit a debt so that your debts appear to total less than £30,000.
If you try to leave a debt out, it will probably be discovered as part of the DRO application process. If it isn’t, then it may well be discovered by the Official Receiver’s Office who check credit records to make sure debts are not left out. If a debt is found that takes you over the £30,000 limit, your DRO will be cancelled and your application fee will not be refunded.
(4) and (5) however may come into the only two grey areas: unenforceable debts and HP debts.
Unenforceable debts
An “unenforceable debt” is one where the creditor could take you to court for a CCJ and win.
The Insolvency Service says that if you have evidence that a debt is unenforceable (such as a letter from the creditor or a court order) and don’t want to include it in your DRO because it would take your total debts over the £30,000 limit, then it does not have to be listed.
This can happen for a number of reasons but the two common ones are:
The debt is statute barred
If a debt is very old and you haven’t had contact with the debt collector for years, it may be statute-barred, which would make the debt unenforceable. It is not always easy to tell exactly when a debt becomes statute barred, especially for debts such as overdrafts. If you have an old debt you haven’t paid for more than six years, discuss this with the Approved Intermediary that is drawing up your DRO application.
The creditor can’t produce the CCA agreement
For credit cards, catalogues, HP agreements and most loans, if the creditor cannot produce a Consumer Credit Act agreement for your debt it is unenforceable. So if you ask for this and they reply that it cannot be located you could use this letter as evidence to leave the debt out.
The problem here is that it is a possibility that the agreement could be found later – if it is the creditor could then chase you for the debt as it has not been included in your DRO. And if including the debt would have taken the debt total over the limit, the DRO is likely to be cancelled – the legal term for this is “revoked”.
Also you need to allow plenty of time for the creditor to find the agreement. The Act says the debt is unenforceable if they creditor hasn’t produced it within 12 days, but in practice the debt collector often has to ask the original creditor for this and it is quite likely that it can be found within a couple of months. After several months it gets much less likely!
Hire Purchase debts
If you have any arrears on a HP agreement, it has to be included in your DRO and after a DRO you are not allowed to make any repayments to those arrears. There is no discretion here. If a friend or relative can take over paying this debt you may still be able to keep the item.
Some HP agreements have a term that says that the agreement may be terminated if the borrower becomes insolvent, which includes having a DRO. If this is the case, then the debt has to be included in your DRO. If you are unsure about this, your Approved Intermediary will be able to tell if this applies to you.
If you do not have any arrears, then you can choose to leave the HP debt out of your DRO application. The future payments you need to make to the lender will be allowed if the item is classified as “part of the basic domestic needs of the debtor and his family”. You need to discuss this with the Approved Intermediary putting forward your DRO because it is a complex area.
Guarantor loans
If you are the guarantor, the debt can be included if you are paying the loan but not if, so far, the borrower is continuing to pay.
If you are the borrower for a guarantor loan, it must be included in your DRO, even though the lender will then go after your guarantor.
See Guarantor loans and insolvency for details and your options.
What happens if you forget to include a debt?
If you forget a debt by accident and it is not picked up by the Approved Intermediary but emerges after your DRO application has been made, then if the debt would take you over the DRO limit, your DRO will be cancelled.
If your total will still be under the 30k limit then your DRO will not be affected but the debt will not be included in the DRO so at the end of the DRO period, you will still owe the money. This is unlike bankruptcy, where all debts are wiped out even if they were not listed on the bankruptcy petition.
What can you do if you are over the limit?
Trying to repay the debts for a while to get them under the DRO limit often doesn’t work very well because you don’t have much spare money and interest or charges may be added faster than you can clear them.
One possibility that may work for you is making an affordability complaint. See Asking for a refund for details about how to do this for different types of debts.
Here you don’t need to get enough money back to clear all your debts, just enough to get your debt total under the DRO limit. Sometimes refund won’t be sent to you but it will be used to reduce the debt you still owe – that’s fine as it gets your total debts down.
If you are sent a cheque, then divide it amongst your debts, don’t just pay it off one of them as that would be “giving preference” to one creditor. If you aren’t sure about how to do this talk to an Approved Intermediary about setting up a DRO and they will be able to advise you.
Ultimately though bankruptcy is usually the best option if you would qualify for a DRO apart from the fact your debts are over the limit.
The bankruptcy fees are high but you may be able to get help with them. Don’t opt for an IVA because the bankruptcy fees look too high – that is committing yourself to making monthly payments which you really can’t afford for 5 years – a big mistake.
DRO applications – FAQs
What happens to a DRO if you get more money
Could PPI get you out of debt?
Michelle says
Hi I have been advised by the cab to do a DRO as I have around 5 k debt with 5 creditors including working Tax overpayment, Housing Benefit overpayment, Argos card, catalogue, co- op energy etc. I am happy to go ahead as I only have £122 a week income as I work part time and have a deficit every month of about £140.
I am 18 months into a Fiat PCP car finance on a Fiat 500, I paid an £2800 deposit (old car value) so my monthly payments are a small £59 a month. Ive paid off over £1000 so far and rang the finance company to ask about penalty to return the car before the 3 year ends and they want £1200!!!!!! They said I can sell it but there will be no equity. My dad said he will take over the credit and payments for me to help me out but the finance company said no to changing the credit contract to my dads name. What is my best option please, as buses and trains are going to be more expensive for me getting to work etc and I have 2 grandchildren I look after a couple of times a week so need to keep the car if possible.
Sara (Debt Camel) says
If there is nothing in the agreement which says that it will terminate if you become insolvent AND there are no arrears AND a
member of your family is prepared to pay the leasing company then you may be OK to leave the debt out of your DRO.
You need to discuss this with the person setting up your DRO. If they don’t seem familiar with it, show them the guidance note linked to in this article.
Michelle says
Hi thanks for your reply. I went back to my local CAB yesterday and discussed the possibility of a DRO again, it seems the only way forward for me.
The car is a grey area one advisor said it might be ok to leave out as you said previously, but another advisor said basically no way, told me I need to downsize from my 2 bed to lose the bedroom tax, and said I can’t afford a car anyway, made me feel much worse and I went home in tears. I don’t know what to do now it seems I can’t win whatever I do with the car, even though my father has offered to pay the £59 a month for me… :( :(
Sara (Debt Camel) says
OK there are two problems here. If the bedroom tax means your budget is unsustainable then a way needs to be found round this problem (downsizing, getting a lodger, having another family member live with you, having the deficit covered by someone else in you family…)
The car issue, if the CAB advisers are not clear and agreed, then they could either talk to CAB’s NationaLSpecialist Debt Team or ask the DRO Unit for guidance about this.
Sandy says
Hello,i really need advice..Im in quite a bit of debt now..£8000 in total..I have been advised to go on a Dro..Only thing is i have a car on HP which i pay every month&it is essential for work..Are you allowed to keep a car on HP if you go on a Dro..I really dont want to give it up&so far have paid Two years of payments..Can someone advise me on this please..Northern Ireland
Sara (Debt Camel) says
Hi Sandy, you need to talk to the debt advisor that will set up your DRO about this situation, as this article explains.
garth says
I have a large and long standing mortgage shortfall debt from divorce and have never paid anything towards this as I have no surplus money and am on pension credit the Building Society has accepted this If they agree to write the debt off could I get a DRO as other debts are below the limit this many are already past six years with no acknowledgement?Bankruptcy is not affordable!
Sara (Debt Camel) says
If you get a letter from the mortgage lender that they have written off the debt, it won’t be counted towards the DRO limit.
If they won’t write it off, then https://debtcamel.co.uk/help-with-bankruptcy-fees/ has ideas that may help with the bankruptcy fees.
MikeH says
Hi
I am looking at entering into a DRO as my monthly outgoings now exceed my monthly wage. I owe £21,000 in total which I know is over the permitted £20,000. Would I be OK if a family member paid off some of my debt so that I fell below the £20,000? Also, I have a car on a personal lease of which I’m contracted to for two years (I’m about 6mths into it), will I be able to keep this lease active as it is crucial for my work.
Thanks in advance
Mike
Sara (Debt Camel) says
Hi Mike, yes it is possible for someone else to pay off some of your debts to get under the £20,000 bar. But this needs to be doen carefully, you need to talk to a debt adviser who sets up DROs about this. Car finance can also be tricky, see https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/debt-relief-orders/debt-relief-orders-explained/how-income-debts-and-belongings-are-assessed-for-a-debt-relief-order/, again the debt adviser can look through the details for you.
John doe says
Hi i just took my debt pack to the cab and now im just waiting for some debt advisor to get back to me but i really need some money till payday will this effect my DRO if i take a small loan? Its like a week till i get paid and when i do i imagine i will be off to pay for my application then… Just worried ill get rejected it does not put me anywhere near the threshhold pf 20k im only in about 10k thanks in advanced
Sara (Debt Camel) says
Seriously bad idea – you know you are insolvent or you wouldn’t be applying for a DRO, you can’t borrow more money now. How are you going to manage after your DRO if you can’t get through the next week? Go into your CAB on Monday and they can help with a food bank voucher. Also read https://debtcamel.co.uk/snapshot/not-enough-to-live-on/emergency-budgeting/.
Anne Cooper says
My CAB advisor obtained an Experian Credit Report on my behalf. He wants to include my Virgin Media monthly bill on my DRO. This account is in my name but is our only ‘luxury’ item and my two kids pay the bill between them each month. If it’s included in the DRO am I right in thinking that this should no longer be paid? I need contact with the outside world…tv phone & internet as I am disabled. I am concerned about losing these services…
Sara (Debt Camel) says
yoy need to talk to your advisor about this, but if your adult children are paying it there shouldn’t be a problem with this continuing after your DRO starts.
Darren says
Hi,
I have historic credit card and overdraft debt of about 19K and I appear to meet the criteria as in renting etc. With the amount of debt built up I was essentially living on credit. 3 months back my employment stopped and I used some of the overdraft credit on gambling transactions showing as paypal. I am hoping to resume employment in the next month. My question is would this affect my application or would I be better holding off the application for say 3 months so that none of these transactions appear?
Sara (Debt Camel) says
I am less worried about the gambling transactions that the fact you are expecting to get a job next month, it would probably be better to wait until after this so you know if you will still meet the DRO criteria. But talk to Citizens Advice now about this and the gambling.
Emma says
I have an Amigo loan…. Would I have to include this in my dro as I wouldn’t want my sister to foot this bill?
Sara (Debt Camel) says
No, sorry, you can’t leave this out :(
maverick1103 says
Hi, I’m currently borderline the 20k limit with about 14 creditors and I’m currently getting all of my up to date figures from them, my question is I currently have a mobile phone contract along with a tablet and home broadband with Vodafone which are all up to date, would I still be able to continue with these or would they be ceased and included therefore taking me over the 20k limit? The same question applies to Sky which I have a TV package with.
Thanks.
Sara (Debt Camel) says
You need to talk to a debt adviser asap – I suggest your local Citizens Advice (they set up over 50% of DROs) or National Debtline if you prefer to do this on the phone.
From my experience, most people who think they are borderline are actually over it when the numbers are added up unless interest is frozen on all of their debts.
have you looked at reducing the cost of your Sky package?
maverick1103 says
I’m currently in talks with StepChange re my situation, they’ve suggested either a DRO or Bankruptcy, however, I’m getting all the details together and ensuring amounts are correct etc.
I was curious regarding my mobile phone contract if I can keep it as it’s not in debt.
Yes, I’ve already reduced Sky package down.
Thanks
Sara (Debt Camel) says
Good, then StepChange will know your full situation and which debts should be included and what expenses it’s OK to include when assessing if you have less than £50 a week spare income.
maverick1103 says
Thanks for the advice!
Jackie embleton says
Hi I got DRO but my biggest dept was missed off I contact my advisor at citizens advice who apologised and told me she’d already sent it off so nothing I can do about it any advice would be grateful thank you
Sara (Debt Camel) says
Was your debt advisor aware of this debt and forgot to include it in the application?
Jackie says
Yes she said she didn’t remember me saying it needs to be included.
Clare says
Hi I have an amigo loan that my uncle is prepared to clear so that I can enter Into a DRO, would him paying it off have a bad effect on me getting a dro?
Sara (Debt Camel) says
If the debt is being repaid by someone else, this should not be a problem for your DRO. To make it very clear what happened, get your uncle to repay the debt directly rather than give you the money to do this.
Merie says
Hi
I have just had an appointment with cab and the only way forward is a DRO. I have a car on finance and 2 catalogues and a personal loan. Can i sell the car and pay the finance for it and the 2 catalogues with the money?
Sara (Debt Camel) says
You can’t sell a car on finance (HP, PCP, lease) because it doesn’t belong to you. What sort of finance is it and when does it end? Do you need a car?
A COOPER says
I am looking to have a DRO.
I have 2 overdrafts and a credit card.
I also owe paypal ( merchant cash advance ) can i have this on the DRO as well ?
Thanks
Sara (Debt Camel) says
Yes you can.
Anonymous says
Hi, I currently have 16k worth of debt and I am in a Debt management plan. I have been adviced to go onto a dro because I can not afford more than £50 per month. My problem is I have a debt of £510 per month with a friend due to an ex screwing me over with a loan and only I signed the contract to pay this back for the next 2 years. I haven’t told them my full income for fear this would be put into the dro when it cannot as it is through a friend. Where do I stand with this and will the dro find out my full income and try to add this debt into a dro please? I don’t want to get into trouble for this as it is something I have to pay
Sara (Debt Camel) says
You cannot either leave this debt out of your DRO or give a false income figure to make it look as though you pass the under £50 a month test.
Going bankrupt is not an option either as you would have sufficient spare income to make monthly payments which would mean you had no spare money to pay your friend.
If you feel you have to pay this debt to your friend then you will need to finish that before tackling the rest of your debts – it is not clear to me that that will be possible. You can try offering all your other debts a low monthly payment but it may be hard to get this accepted. If you do manage to get through to clearing this debt to a friend, then you will have an extra £510 to pay to your debts so they should be cleared in three years.
A more practical approach may be to ask your friend if you can repay over 4 years, leaving more income spare to be paid to your other debts.
Pete Speake says
Hi. I have recently been accepted for a DRO. My sim only contract with virgin media is coming to an end in 2 weeks. I would very much like to remain with virgin media. Will the DRO effect this? I’ve never missed a single direct debit payment in my first 12 months.
Many thanks
Pete
Sara (Debt Camel) says
Phone VM up and say you would like to renew. It’s unlikely there will be a problem, but if there is, well there are plenty of other places you can get sim only contracts from.
Pete Speake says
Thank you for getting back to me so quickly. I’m most grateful & will take your advice. Thanks again!
Louise says
Hiya I’m upto about 19,600 on my DRO, it is in a waiting list to be processed and hopefully should be finalised in 4-6 weeks, part of my debt is car finance on a car that has been stolen, insurance will only be paying out 7000 so leaves me with a shortfall of 4000, my DRO are aware of this so have only included the 4000 in my DRO, as adding the full 11000 of the car will take me over the 20k limit, problem is now the car insurance said they are struggling to obtain the police report so may be another 2-3 months till the 7000 gets realised, can my DRO go ahead with just the 4000 on? I really don’t want to wait any longer, this DRO process has taken me about 3 months as it is and I’m weeks away from it completing
Sara (Debt Camel) says
You will have to ask the person setting up your DRO about this, but they may well want to wait until the insurance write off is clarified. I know this is frustrating, but the last thing you need is for your application to be rejected.
Jayne Hazeldine says
Hi, I am about apply dro for 6000 loan. But I also have catalogue debt 1000 which I don’t want to inude as it was for my children’s Xmas presents school uniform. Do I need to include this, as it is on buy now pay twelve months later.
Daniella says
I’m in the process of a DRO I don’t want to include my 02 contract because it’s not actually mine it’s just in my name so is it possible to leave this out? Also I have literally just changed internet providers and started a new 18 month contract can I leave that out?
Sara (Debt Camel) says
So someone else is paying for the mobile contract? And it’s up to date?
Jan says
Hi. I cant find my account numbers for my creditors for my DRO. My debts are listed on my credit file but only the last 4 numbers. (Help). Also how long does it take to get accepted for a DRO
Sara (Debt Camel) says
Do you not have any letters from debt collectors with the account numbers on them?
From the point the application is submitted, it is usually 1 or 2 working days.
There is a good general page of DRO applications here: https://debtcamel.co.uk/dro-applications-faqs/
Jason says
Hi, I’ve been approved for my DRO and have a car on CPC finance. I already have a family member paying for it so that’s okay in DRO terms. However my contract runs out while waiting on my DRO to finish so I was wondering if I could take out another or do I have to hand the car back, leaving me carless?
Thanks.
Sara (Debt Camel) says
I assume CPC finance was a typo for PCP, so you would have to make a large payment at the end to keep this car – could the family member make this for you?
You can take out a new car finance when you are in a DRO but as it will be for more than £500 you have to tell the lender that you are in a DRO. This normally means you get refused unless you go to the rip off 40% APR type of interest which is killing on car finance.
I am sorry but it would have been better to have thought about this before starting the DRO… But there is never an easy answer to expensive car finance – you would have faced the same problem if you had gone bankrupt or started an IVA instead of a DRO.
Could your nice family member help you to buy a cheap runaround and avoid finance?
Jason says
Sorry PCP yes. Well I have the option of returning the car, exchanging the car for a new one using the equity if possible or buying the car. I was hoping to exchange really.
I guess I was just wondering if it would void my DRO getting a new finance contract or am I okay as long as I don’t pay the monthly bill?
It was discussed but the process took longer than expected.
I was hoping to avoid a cheap runaround due to the problems I’ve had with them in the past but will do if I have to.
Thanks.
Sara (Debt Camel) says
Who is your current lender for PCP and what interest rate are they charging?
Jason says
VW finance, 6.7% APR
Sara (Debt Camel) says
To get car finance when you are in a DRO, you have to tell the lender about your DRO. There is no chance of exchanging for a new one with VW who are not a sub=prime lender. The only people that would touch you are lenders such as Moneybarn who charge 40% APR. The cost of 40% APR over a 3 or 4 year contract is crippling – I recommend a cheap runaround.
Lucy says
Hi Jason,
Can I ask was you’re dro approved with a car finance in you’re name? I am hoping to do a DRO but was advised that it was a grey area in regards to the car. My ex partner pays for the car we jointly share it for the children. I have proof on my bank statements. Is this similar to you’re sitiation?
Rebecca says
Hi, my husband is looking an a DRO. He has a loan of about 18500 and a store card of not much maybe 500. The problem is, how will we know if the loan intrest on the 18500 will bump him over the 20000 limit? Is there a way we can work this out?
Also, because we are married, will this affect my credit by association?
Thank you
Sara (Debt Camel) says
“how will we know if the loan interest on the 18500 will bump him over the 20000 limit?” he can ask for the balance of what is currently owed. the debt adviser who sets up the DRO will check this for you.
“because we are married, will this affect my credit by association” no, your credit will only be affected if you have joint bank accounts or joint loans.
Whisper says
My other half is looking into either a DRO or IVA.
He’s been talking to an advisor and there are a couple of things which we are struggling with.
We’ve gone through all the paper work but they are requesting our proof of childcare now our costs for example are £650 a month, last month I left my job so universal credit are paying up to 85% of the fees. We’ve given an estimate of how much we will be paying but they want actual proof however how it works is we pay the £650 and then the following month they give 85% back so it still looks like we pay £650 at the moment. Is there any way around this?
Also we have a car that on paper is worth 2k but there are so many problems with it that if we sold it was would barely get 1k, how do they value your assets? It’s a joint car we both use it, would it disallow the DRO if we transferred it to my name?
DRO is the better option for us as a family, the debt is 13k in total, we have less than £50 a month expendable income but the car is the only problem.
Also I’m starting a new job in a couple of weeks, would it better better for us to wait till we know exactly how much I will be earning?
Any advice on this will be a great help thanks!
Sara (Debt Camel) says
” they are requesting our proof of childcare now our costs for example are £650 a month,” who is “they”?
If your other half meets the criteria for a DRO that is always a better option for her than an IVA. Only exception is if she is about to move into a much better paying job.
A jointly owned car… Who actually bought it? Whose name was on the receipt? It doesn’t matter who drives it.
Marie says
Hello please can you advise what is best..i currently have 11k debts of bank loan credit card catologue..im on universal credit with £66 spare each month..i have a car worth approximately £4500 to £5000..i had my loan deffered for 18months..and 1 of my credit cards allows me to pay £10 a month..but i really want to get it all together and get rid of it once and for all..your advice would be much appreciated
Sara (Debt Camel) says
“with £66 spare each month” that is a very exact figure – how did you calculate it? Is that after making any payments to your debts?
Also are you working? Do you expect to be able to earn more in the future or do you think your situation may get worse?
Marie says
I used the stepchange calculation..no that is paying no debts..im not working currently on universal credit..with 2 children
Sara (Debt Camel) says
OK, if you arent working, on UC with children, your best option would normally be a Debt Relief Order, but for that you can’t own a car that is worth more than 4-5k. I suggest you talk to National Debtline on 0808 808 4000 about this, as the car is a big problem. On that little income a DMP would last a very long while and an IVA would be very risky and could well fail.
Marie says
Thank you for that..i will give them a call
Joe says
Hi
I was recently approved for my DRO. During my application with Stepchange, I was asked to remove a debt as it appeared to Stepchange that this debt was an HP agreement. Following their advice, I removed the debt from the creditors schedule. The company I owe the debt to, subsequently asked to be included into the DRO order as according to them, the debt is not an HP. I contacted Stepchange and notified them of this, pointing out that the Stepchange advisor had made an error in assessing this debt and that consequently I am liable for this debt. ( which as an insolvent individual Ia neither can afford to repay, nor allowed to repay, so as to not favour one creditor over another ).
Can I contact the Insolvency service and have this dent post application included into the creditors schedule of my DRO ?
The company I owe the debt to, would be willing to write the debt off, provided they are included into the creditors schedule.
I appreciate this is not an easy situation, and frankly I have no idea how to proceed since I am neither allowed to make any repayments, nor have any money to pay anything…
Sara (Debt Camel) says
You need to talk to StepChange. They may be able to get this included in your DRO. If they can’t then you should put in a written complaint to StepChange saying they advised you incorrectly to leave the debt out of your DRO and you would like them to settle the debt on your behalf in compensation for their mistake.
Marie says
Hello,
I am in £19,000 debt. I am very near the £20,000 limit. I have not submitted my application yet to SC. My parents have volunteered to help me pay off one credit card in full and my PayPal account in full with both debts adding up to £1,500. Will this affect my application, as I am picking and choosing what debt to pay off, but I am only picking those as it is what they can afford and the amounts are less. I would also like to keep those for an emergency. If they do pay, when should this be done? Before submitting the application or during the submission of the application?
mark says
i have 5k debts and i’m now on esa, i’m also a guarantor for my mums loan with amigo loans and could all that be included in a dro? thanks for your help.
Sara (Debt Camel) says
Sorry some questions which may not sound relevant but guarantor loans are not typical debts and are legally complicated.
is your mum still paying the loan?
If yes, is she having difficulty affording it?
Were you on ESA when you became the guarantor?
If no, could you really have afforded the loan repayments at that point, this means could you repay them and all your other bills, expenses and other debts every month without hardship?
Sara (Debt Camel) says
I have now written an article on DROs and guarantor loans: https://debtcamel.co.uk/guarantor-loans-in-dro-iva-bankruptcy/
Jenna says
Hi
I’m currently in debt management plan. Totalled my debts today and some creditors have been adding interest still so my debts are currently 18,650
I also have overdraft of about 1,500 for my current account which I am still using I was hoping to reduce this myself slowly but it’s proofing difficult.
I am now considering a DRO I am aware that my overdraft would need to be included but that would take me to over 21,000. My mum has told me that she would clear my overdraft for me in full so I will be eligible for DRO.
Is this allowed? Or would it be frowned upon by the official receiver?
Thanks
Sara (Debt Camel) says
Can I ask how long you have been in a DMP? Which lenders are still adding interest? How much you are paying to the DMP? And what overdraft fees you are currently paying?
It’s OK for your nice mum to help you by clearing a chunk of your debt to get you under 20k – but are you sure she can afford it?
It’s her decision what debt to clear, not yours, so the Official Receiver won’t mind that you paid one debt and not the others. You could ask your mum to send you an email suggesting that she would like to clear your overdraft for you. Then you can show this email to the OR (or to the person that arranges your DRO) if you get asked about it.
Jenna says
Thanks for your reply. I’ve only been in DMP since July and I thought I could reduce my overdraft initially therefore I did not include it. My debt management plan I pay 32 a month and then the overdraft fees are 30 a month I might have to increase my budget tho as I’ve not saved for Christmas and I’m now anxious about being able to afford Christmas. The creditor still adding interest which has increased the debt £300 Is Very. They’ve passed the account to moorcroft according to step change but I’m still receiving statement from Very which is how I’ve notice to 300 increase. I’m yet to receive any letters from Moorcroft. I need to phone Very see what is going on. My mum can afford it over a period of 2-3 months she said. So I need proof to show she’s paid it then really .i.e bank transfers from her to my account? And is it best to wait to do this until we have had permission from the official receiver?
Thank you so much for your help
Sara (Debt Camel) says
Phoning Very is a good idea. Ask them to stop adding interest. Point out all your other creditors in your DMP Have stopped adding interest and say they are not treating you fairly.If they refuse, say you want this treated as a formal complaint – they may transfer you to a different department ot do this – and you will send it to the Ombudsman unless they stop. There is a seperate article on ths https://debtcamel.co.uk/creditor-wont-freeze-interest/ if you want to see why they should do this.
I think you need to ask your DMP firm to include the overdraft and open a new bank account. You are very close to the £20000 limit. if it takes your mum a few months to be able to help you, the overdraft is getting worse each month at the moment.
Your mum has to clear the overdraft to get you under the 20k limit befoee your DRO application goes in. Your DRO adviser won’t let the application go in until it is below this amount. So it is all sorted before the application, you don’t have wait for permission from the OR.
Are you with StepChange? I think you should be talking to them now about setting up a DRO. Say what the plan is for your mum to help clear the overdraft. DROs take 2-3 months to set up, so you may be able to get this underway now.
Tim says
Hi,
I am £27,000 in credit card debt and totally desperate to pay it off somehow. I have made three large payments totalling £16,000 towards my credit cards last year but my debt went up again to nearly the same level as I’ve been paying mostly with my credit cards. I just lost my job after being furloughed for 15 months and I’m not behind any payments towards my credit card debt yet but the interest I’m paying is completely unsustainable and I will be living off Universal credit entirely soon.
I’m thinking about either DRO or IVA at the moment but I need to pay off a £7000 personal loan first, which I’ve been saving for since last year. However, after reading debt related blogs, including yours, I’m worried that paying off £7000 loan may stop me from getting a DRO. Can I ask you for an advice please. Any help would be very much appreciated.
Thank you
Sara (Debt Camel) says
I assume you are renting not buying?
This personal loan, is it from a relative or friend, or is it a commercial loan?
How long is it likely to be until you are back in work? Did you get any redundancy pay?
Tim says
Hi Sara,
I am renting, indeed. Reg the loan, I’ve borrowed money from someone I used to worked with but we’re not in a very good relationships anymore and I need to pay him off asap.
I’m not sure about the work but I’m not expecting it very soon, tbh.
My redundancy pay has been paid nearly in full towards one of my credit cards, together with money from my bike accident injury claim and my motorbike. Altogether roughly £16, 000 last year in May and November.
Thanks again for your help.
Sara (Debt Camel) says
If you have to pay off this personal loan then that is what has to happen.
But it will stop you getting a DRO because you are giving preference to one of your creditors.
It may not stop you getting an IVA, but an IVA when you are out of work and on UC is a mad idea. It would be desperately hard to afford the monthly payments.
Instead I suggest you contact your credit cards now and make them a token £1 a month offer and ask them to freeze interest. See https://debtcamel.co.uk/token-payment-debt/. You haven’t mentioned an overdraft, but if you have one, you need a new basic bank account with someone you don’t owe any money to and to tell the bank with the overdraft that you cannot afford the monthly charges and ask them to halt the charges and you will pay a £1 a month.
Then settle back and look for another job. When you get a new job you can revisit what you can pay to your debts. Don’t rush into an IVA at that point either, you have no assets to protect. It may be better to just increase what you are paying to the debts – they will start to drop with interest frozen. But that decision is a way in the future, cross that bridge when you come to it.
Tim says
Thank you Sara!
Jane says
Hi
I have 4500 debt on credit cards and catalogues. I have been advised to apply for a DRO through stepchange. I’m going to complete the paperwork next month after I have my 3rd payslip as proof of income after starting my new job 2 months ago after a period of unemployment. I’ve realised after applying for breathing space that I forgot a credit card debt of only 150. It 8s a batclays credit card and my current account with no overdraft is with barclays. If I clear this will it be seen as showing preference? Will it mean my bank account gets closed due to just 150 if I have to include it on my DRO?
Sara (Debt Camel) says
Tell StepChange about the missed credit card debt and they will include it in your breathing space and DRO.
Don’t clear this – that would be preference.
Barclays may close your account anyway because of the DRO or they may not – this decision is unlikely to be affected by the Barclaycard debt. It’s no big deal if they close it, you just get a new basic bank account with another bank.
Matt says
Hi
I have gone through the process of DRO and just this morning received email confirmation that my DRO has been accepted.
However I only just realised I didn’t add the interest on for 2 of my creditors. Can this be amended so the interest of a loan is added to the DRO.
Kind regards
Sara (Debt Camel) says
Go back and tell the adviser that set up your DRO what has happened – this may well be ok if doesn’t take you over the DRO £30,000 limit.
sacha says
Hi
I am in the process of a DRO, I live with my partner but we have separate finance issues. We have rent arrears off £1000 my partner is paying £100 month, I added the arrears to my DRO but my partner does not want it on my DRO as he is dealing with it and does not want it to affect our council tenancy. Can I remove it? It’s in both our names but he taking responsibility for it
Sara (Debt Camel) says
You should talk to your DRO adviser about this but normally the decision is that all your debts have to be included in a DRO and it is not possible to leave one out. However in this case if there is a payment arrangement in place and your partner carries on making the payments as agreed, it seems unlikely to affect your tenancy.