Debt Relief Order
In the UK, many people find themselves struggling to pay back money they owe; a Debt Relief Order (DRO) is one solution for these issues. There are many reasons why someone might end up with debts they can’t afford to pay back. Some of the common things which can lead to this include credit cards, buying from catalogues and taking out loans.
This can be a really stressful situation to be in and things can escalate to a point which you can’t control. There is help available to make these financial problems easier to manage, and you are not alone as you can find advice from professionals. This could help you make a fresh start and get back on track with repayments to your creditors, or clear debts you can’t afford to pay back.
What is a Debt Relief Order?
A Debt Relief Order is a way of having your existing debts written off if you cannot afford to repay them. You may be able to take this route if you don’t have many assets and your level of debt is quite low. If you qualify for this, you’ll be able to get help from our team to start the process.
This is often seen as an alternative to bankruptcy which comes at a lower cost. You also won’t have to pay anything towards what you owe for 12 months, and after that period the debts will be written off if your situation hasn’t improved. The creditors you owe money to will not be allowed to pursue or harass you during this one year period.
A DRO may be offered to people living in the UK, however it is not available to anyone living in Scotland. A similar solution for Scottish residents is known as a Minimal Assets Process (MAP).
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Debt Relief Order Criteria
There is certain Debt Relief Order criteria that you will need to meet before you are able to apply for this solution. Here are some of the things that will have to apply to you and your situation:
- You need to have less than £1000 in assets, and if you have a car it must be worth less than £1000
- You must live in England, Wales or Northern Ireland
- You cannot have more than £50 in surplus income each
- You can’t apply if you’re a homeowner.
If you meet these criteria you can look into applying for a DRO. Be sure to get help from our advisors first to make sure that it is the right option for you. They may also be able to give information on other solutions which could be better for your situation. There are a few options available and a specialist advisor can explain the pros and cons of each of these to you.
Everyone is different and there are many variables including the type of debts you have, your income, your assets and how many creditors you have. Something which works well for someone else may not be the right choice for you. This is why you should seek help from an expert first to make sure you are doing what’s best.
See what debt solutions are available for you
Debt Relief Order Application
If you qualify for this, the next step will be to fill in a Debt Relief Order application. Before taking this step, make sure to speak with a qualified advisor who can help with the process and ensure everything is done correctly. It can be tricky knowing what information you need so we aim to make it easier to deal with.
Our team can provide you with the necessary forms and offer assistance during the application process. Be aware that in order to submit this, there will be a £90 fee to pay to the relevant UK Insolvency Service. This can either be a one off payment or you can pay it in instalments. The application can then be submitted once this fee has been paid in full.
Although there is still a small payment involved, this is a much cheaper alternative to filing for bankruptcy and it has fewer consequences on your future credit chances. It all depends on how much debt you have and the value of your assets.
DRO Register UK
When you enter into this process, your information will be recorded on the DRO Register in the UK, also known as the Insolvency Register. This is an online database which holds details about IVAs and bankruptcies as well. With a DRO, your details will remain on this register for the 12 month duration, as well as three months after it ends.
Anyone can access this information, and it will remain on your credit file for six years from the date it was approved. This means it could affect your ability to get credit during this time, so that’s another thing to be aware of. You also won’t be able to apply for another one for six years, even if your previous one ended up being approved and later cancelled.
Solutions for Relieving Debt
There are many reasons why someone might end up with debts that they can’t repay. These days there are lots of ways for people to take out credit, and in some cases they may not be able to repay it when the time comes. Some of the common things which lead to this situation include:
- Losing a job
- Falling behind on mortgage payments and bills
- Taking out loans
- Using credit cards
- Buying good from catalogues
- Having a car on finance
These can all put someone in a position where they are considering a DRO or other solutions for relieving debt. Other options include IVAs, Debt Management Plans and even bankruptcy. The one you choose will depend on your situation and what will help you the most.
Feel free to get in touch with our team today if you’d like more help with DROs and any other solutions which might work for you. We aim to help reduce your stress and make it easier for you to deal with your existing debts.