Spiralling Debt- DRO?

[Inneedofadviceplease]

Hi everyone,

Please be kind. My debt has gotten out of control. I’m a single parent, having recently left a DV relationship (where a lot of this debt was accumulated on affording to live along with the cost of setting up a new house for myself and my child). I’m on an income low enough to claim UC top ups.

I have around £16000 of debt. I know it’s sickening and I’m really ashamed, however with the current cost of living this is only getting worse as I’m having to use credit cards to cover the negative I’m in every month due to debt payments. Im only paying the minimum payments be that’s around £600 a month due to rising interest rates etc. I’m looking in to getting a debt relief order where if you have less than £75 left a month and less than £2000 assets (I do fit this criteria) then your debt is written off after 12 months if there’s no change to your circumstances which I don’t envisage there being. I know this wrecks your credit rating for 6+ years however it’s already wrecked and not getting better anytime soon.

My concern is I have a car on hire purchase. I’ve never missed a payment on this and it is essential for my to be able to work (no public transport to my place of employment). Because of this, from what I’ve read the payment for this will be allowed as an ‘allowable expense’ on a DRO as there is a domestic need to have it. However, there is a clause in my finance agreement stating they have a right to terminate the agreement and repossess the car if you enter insolvency which a DRO is. My question is, if I continued making payments as I have done would they be informed I’d entered a DRO? How common is it for finance companies to act on this clause if you’ve never missed a payment? Does anyone have any experience of this or advice? I really couldn’t be without my car as I then couldn’t work and would really be screwed. Any advice on this or in general is appreciated.

Thank you

If no one "in the know" on here replies, you should email your local Citizens Advice Bureau about this and ask for an appointment with a debt adviser. They will be able to help you.

Best ask your question on the Moneysavingexpert.com DRO and living with it forum in the debt free wannabe section.

They'll also help you tailor your budget so it doesn't miss anything (people in debt often needlessly prioritise debt repayments over essentials so it's likely you'll need to add in or increase some spending categories).

It is highly unlikely that you would be able to justify the HP payments as an ‘allowable expense’ if the car is worth more than £2k. You may be able to if it’s been adapted for disability say - otherwise you’d probably be expected to terminate the agreement and get a cheaper car. You can terminate at any time (unless the lender does it first). How much you have to pay after you’ve terminated depends on how much you’ve already paid (if it’s over 50% of total or not). HP lender can act on an insolvency clause if they want. One option is to find someone to take over the payments for you (easier said than done but is allowed). Debt adviser at CAB here.

Hi love, I'm so sorry you're in this position I'm in the exact same position myself and was wondering if you could let me know how your situation is now in terms of your car? I hope it all worked out for you xx

I'd recommend speaking to a debt charity like https://www.stepchange.org/?gad_source=1&gclid=Cj0KCQiAqsitBhDlARIsAGMR1RjMWgyNodzi0W5savFr72nhso4NTrCOC0V3szNlzUddzSj-JaVub-4aAjCCEALw_wcB&gclsrc=aw.ds