Everyone has heard of bankruptcy, but Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs) are less well known. Here is a comparison of IVAs and DROs, so you can see would be better for you. DROs and IVAs were the two most common types of personal insolvency in England and Wales in 2019. Some choices between debt solutions are genuinely hard. When I wrote … [Read more...]
Articles on Debt Relief Orders (DROs)
Debt Relief Orders (DROs) are described in detail here A Guide to Debt Relief Orders. That lists the conditions for getting a DRO - your total debts have to be less than £20,000), you can't own a house etc - together with their advantages and disadvantages and how to set one up.
DROs are a form of insolvency so don't consider one if you only have a temporary debt problem. But if your debt problem is serious and you meet the DRO criteria, then a DRO is very often the best possible solution for you.
You both have debts – but may need different debt solutions
You both have debts, you both know it's time to tackle them and you want to do this together. But if one of you has a lot more debt, or a much larger income, or you own different assets, you don't have to have the same debt solution. A good debt adviser will help you look at what option each of you needs to get the best result for your family going forward. This article looks at some of … [Read more...]
Should I end my IVA and change to a DRO?
If you are struggling with your IVA payments, you may be wondering if you can switch to a Debt Relief Order (DRO). Your IVA may have been sensible when it was started, but a change in circumstances (pay drop? new baby? separation?) may now be making it hard to afford the payments. Or perhaps a DRO would always have been better than an IVA for you - quicker, cheaper, less risky - but no-one … [Read more...]
DRO applications – frequently asked questions
A Debt Relief Order (DRO) is often the best debt solution if you have under £20,000 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. 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, … [Read more...]
Inheriting money when in a DMP, DRO, IVA or bankruptcy
What happens if you inherit money when you are in debt management or one of the three forms of insolvency: Debt Relief Order (DRO), bankruptcy or IVA? The answers are surprisingly different... Inheriting in a DMP This is the easiest case. Any money you inherit comes to you, not to your creditors or your DMP firm. It doesn't matter if the person dies before your DMP started or during your … [Read more...]
Should you give a large gift to someone in a DRO?
A reader asked: I want to give £4,000 each to my children - it's money from their nan who would have wanted them to have it. But one daughter started a DRO a few months ago. I think she would have this money taken away so should I buy her a car instead? Things are difficult for her as she gets no child maintenance. What happens if you give her cash? If you give her the money now, she wouldn't … [Read more...]
2016 insolvency numbers up – but rising debt isn’t the main cause
On 27 January the Insolvency Service published the data on insolvency in 2016. The number of people who became insolvent in England and Wales last year was 90,930. As the graph above shows, this has reversed the trend of personal insolvency numbers falling every year: the total for 2016 is over 13% higher than in 2015, the first time there has been a rise since 2009. Bank of England statistics … [Read more...]
Joint debts – what happens in an IVA / DRO / bankruptcy
A reader asked: I have received a letter saying we still owe £4,000 in council tax. The debt was included in my bankruptcy a few months ago but they are chasing my wife for the full amount, what should we do? This article looks at what happens to joint debts which are unsecured, not mortgages or secured loans. It covers all three forms of insolvency - bankruptcy, DROs and IVAs - because the … [Read more...]
I’ve been sent PPI and my DRO is being revoked
Most people would be delighted to get a letter saying a bank has looked again at their PPI reclaim from a couple of years ago, decided they got it wrong and that a refund should have been paid so a cheque for £2,000 is on the way. But for Mrs P this wasn't good news. Her first thought was not what to do with the money, but would it make a difference to her Debt Relief Order. She talked to the … [Read more...]
Can you have too little income to go bankrupt?
A reader asked: I was told bankruptcy is not recommended to me as I do not have an income. Not sure what that means really as that is why I have debt problems as I have no income :( Any possible future employment is not near enough to pay the monthly payments told to me of a debt management plan. So confused I need to get richer to be bankrupt or get even richer to pay debt management … [Read more...]