DRO with Unenforceable's

[Riz]

Re: DRO with Unenforceable's

Great one rizzle. It would be good to clear some of the Grey.

Forgot to send the replies on to you. Oops!

Check your PMs for the full text (for what it's worth).

But for the record here:

Two intermediaries would definitely want solid conformation that the debt was unenforceable (from creditor etc) before they would not list otherwise qualifying debts. The other would do it on request, but would say that it's on your head if it turn out not to be UE.

Basically for the intermediary to make the judgement call it seems, so not much clarity as it depends on the one you have/choose.

[Undercover Elsa]

Re: DRO with Unenforceable's

Hi Gregco,
I notice from your diary that one of your debts has PPI on it. Have you tried to calculate how much you could reclaim? This could then reduce your balance nearer to the £15K cutoff point.

Similarly, another debt is with 1st Credit, maybe Niddy could have a look at this one specifically to see if it can be "sorted" via his contacts if there any way at all you could drum up enough for a low f&f?
Again being £3K+ this would put you under the limit...

Elsa x

[gregco]

Re: DRO with Unenforceable's

Great one rizzle. It would be good to clear some of the Grey.

[Riz]

Re: DRO with Unenforceable's

So I suppose the question is what would satisfy an intermediary?

On that point, rather than go into more speculation, I will ask some intermediaries what they think they would require to see and be sure of. I have contacts for a few.

[Riz]

Re: DRO with Unenforceable's

I had a feeling I had seen it mentioned officially somewhere.

The full intermediary guidance notes expand on what is said in my previous link.

Here: http://www.i-m-a.org.uk/pdfs/Interme...April_2011.pdf

Statute Barred Debts and Other Unenforceable Debts
This issue of statue barred debts is not at all straight forward and limitation on
debt is a complex area of law, however advice has been obtained regarding
whether statute barred debts need to be scheduled in a DRO application.
Section 251B of the Insolvency Act 1986 states the following:

251B Making of application
(2) The application must include—
(a) a list of the debts to which the debtor is subject at the date of the application, specifying
the amount of each debt (including any interest, penalty or other sum that has become
payable in relation to that debt on or before that date) and the creditor to whom it is owed;

However, Section 251A (2) (a) of the IA 1986 states that a qualifying debt
means a debt that is for a liquidated sum payable immediately or at some
certain future time.

If a debt is indeed statute barred then it is neither “payable immediately or at
some certain future time”.

Firstly to clarify, limitation periods on debts do differ: all contract claims are
barred after six years but claims under deed (i.e. mortgage shortfall debts) are
barred after 12 years. To add to the difficulty if a debt is acknowledged then
time starts to run again.

Limitation, effectively, does not apply against a debt upon which judgment has
been obtained. If the creditor has previously taken a debtor to court and
obtained a judgment, the debtor will be unable to use the Limitations Act 1980
to dispute the debt. If the judgment is over 6 years old the creditor may need
the permission of the Court to enforce the debt.

It is also correct that a „debt‟ exists beyond the limitation period but the creditor
can lose any right to enforce the debt by virtue of limitation.

Due to the uncertainty of limitation, the first principle must be that all unpaid
debts should be listed in the application for a DRO; this is so even if the debtor
considers that they may be able to rely upon a defence of limitation against
enforcement of that debt. Where, prior to the DRO application being submitted,
the Intermediary has established that limitation applies and the debtor has
evidence that the debt is statute-barred, then the debtor can choose not to list it
The Intermediary should be satisfied that the debt is statute barred and keep
any evidence on the debtor’s file.

Debts that can be shown to be unenforceable for another reason, for example,
a pre-April 2007 Consumer Credit Act regulated agreement that does not
comply with the requirements on prescribed terms, can be treated in the same
way. Where the court would have discretion whether or not to enforce a debt, it
should not be regarded as unenforceable, e.g. a post-April 2007 CCA regulated
agreement that does not comply with the requirements on prescribed terms.

If a debtor knows that they have a statute barred debt but has no information
about it and it does not appear on any credit reference reports, an application
can proceed without including the debt.

In any scenario where statute barred debts are not scheduled in a DRO
application a note should be included in the application explaining that there
are statute barred debts detailing the sum if known or explaining the quantum
is unknown, or an email sent to the DRO Unit explaining this before the
application is submitted.

In summary, debts barred by limitation or otherwise unenforceable do not need
to be included as qualifying debts for the purposes of a DRO and if they are not
listed will not count towards the £15,000 debt limit.

Where the official receiver subsequently discovers that a debt was not statute-
barred/unenforceable and as a consequence, at the date of the DRO
application the debts exceeded £15,000 the DRO will be revoked.

As limitation and enforceability can be such an uncertain area the general rule
should be: if in doubt, list it.

So I suppose the question is what would satisfy an intermediary?

I would have though as said, some binding admission from the creditor or ruling from the court.

Just saying "I think this is unenforceable because x, y , z" probably won't cut it?

Plus, again, as said, if you are wrong then you won't be protected from action by the creditor and the whole DRO could end up being revoked.

[Riz]

Re: DRO with Unenforceable's

When I was looking at a DRO myself CAB said that if I went ahead at taking a DRO then any further debts that hadnt been listed for any reason whatsoever would be disregarded from the DRO application.
Though I was warned that it could be misconstrued as being manipulative and therefore I could then be subjuct to similar restrictions like BRO and BRU?

Not to mention, as above, the risk of the whole DRO being revoked if it puts you over the £15K

[Riz]

Re: DRO with Unenforceable's

'Limitation' has nothing to do with it. We are not talking about a debt being statute barred here.

I was simply using that as an analogous example, and saying that if it could be done then similar principles would likely apply. i.e. that it could only be included if you could independently prove it was unenforceable. In practical terms, that probably means some binding admission by the creditor that they can't go back on, or a ruling from the court.

As said, if not included in the DRO you would:

(a) Not be protected from legal action should it turn out to be enforceable.

(b) If it turned out to be enforceable and/or should not have been excluded from the DRO, then the DRO could be revoked for all the debts.

[kilasuit]

Re: DRO with Unenforceable's

When I was looking at a DRO myself CAB said that if I went ahead at taking a DRO then any further debts that hadnt been listed for any reason whatsoever would be disregarded from the DRO application.
Though I was warned that it could be misconstrued as being manipulative and therefore I could then be subjuct to similar restrictions like BRO and BRU?

[gregco]

Re: DRO with Unenforceable's

What I understand from that is; if the Debt has been Statute-Barred (independently established) before DRO application, then yes its omitted, otherwise No, as limitation is uncertain and the first principle is all debts must be listed. Even though the debtor can rely upon a defence of limitation against enforcement of the debt.
Lets say, if after following the guidelines on this forum, a debt became UE. Then it would still be included in the DRO application, as limitation has not been independently established?, even if the Creditor sends an admission and acceptance of UE?
Lets say, if someone wanted independant limitation of a debt, how would they go about it?

[kilasuit]

Re: DRO with Unenforceable's

The terms of DRO stated that any debt not included ie you forgot about couldn't be added at a later date.

So it's possible but I think that you'd get pushed for either IVA or bankruptcy tbh.

[The Tech Clerk]

Re: DRO with Unenforceable's

Interesting question?

[Riz]

Re: DRO with Unenforceable's

I think it likely that even if possible to exclude a debt for the £15K limit, then principles similar to the ones for statute barred debt could apply.

See this link - http://www.i-m-a.org.uk/documents/St...red_debts.docx

i.e. that you would need irrevocable proof, such as an admission from the creditor or ruling from the court, that the debt is unenforceable.

[gregco]

Hello,

Just wondering if anyone has any thought's knowledge about this. If the total debt is about 18k on 4/5 creditors, one debt is for 4k but is unenforceable, and all other criteria are fulfilled, can you get a DRO?