It is common where a couple both have debts for a interlocking IVAs to be proposed. The couple may think of this as being a joint IVA but legally it is two separate IVA agreements with a single budget - income and expenditure - and a single monthly payment being made. That may work well, but it's important to look at each person as an individual as well. There is no reason why both partners … [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.
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...]
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...]
Every debt adviser wants their clients to get out of debt and then stay out of debt. But there is very little evidence about how long people stay debt-free after clearing their debts, through debt management or insolvency. So CAP's Freedom Report, published this week, is very interesting reading. DMPs and DROs were the most frequently used debt solutions for CAP clients in 2015, who had an … [Read more...]
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...]
If you are struggling with your IVA payments, you may be wondering if you can switch to a Debt Relief Order. 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 - quicker, cheaper, less risky - than an IVA for you but no-one explained … [Read more...]
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...]
An DRO will be shown on your credit record for six years. This article looks at what should happen, how to correct any problems, and how to start to improve your credit rating when the twelve months of your DRO ends and your debts are wiped out. Even if you never want to be in debt again, a good credit score makes it easier to get a tenancy agreement, get a mobile contract and it's essential if … [Read more...]
If your debts are so bad that you are going to have to choose one of the three types of insolvency, you know this will wreck your credit rating, but how long will this continue? This article answers this and other you may have about the effect of insolvency on your credit record such as Will you ever be able to get credit again? What about a mortgage? Is bankruptcy worse than an IVA or a DRO for … [Read more...]
A reader asked me recently: "I applied for a Debt Relief Order last year and my debt was discharged a few months ago. Now I am working and I have a good income. Can I speak with my creditors and pay off my debts? Can I cancel my DRO ?" There is a procedure to cancel a bankruptcy even after you are discharged - it is called "annulment". It is usually extremely expensive as you have to repay … [Read more...]