Could a debt relief order be the right debt solution for you? Discover the ins and outs with Debt Movement.
Debt Relief Order
A Debt Relief Order (DRO) is a method of debt relief for those that have a relatively small amount of debt and very few assets. A DRO is a low-cost alternative to bankruptcy — it costs £90 to apply for a debt relief order.
What Are the Criteria for a Debt Relief Order?
- You must have less than £20,000 worth of debt.
- You must not be a homeowner.
- You must have minimal assets, and you must not own a car worth over £1,000.
- Your disposable income must be less than £50 per month.
- You must not have been subject to any insolvency processes or have had a DRO in the last six years.
- You must not have sold your assets for less than they are worth or given away money/assets in the last two years.
- You must not have favoured some creditors more than others by paying one more than the others in the last two years.
- You must include ALL of your debts.
Debt Relief Order— Is It Right for Me?
As with all debt solutions, it is important to understand both the advantages and disadvantages of applying for a debt relief order.
Advantages of a Debt Relief Order
- The fee for a DRO is £90 and can be paid in instalments.
- A DRO lasts for 12 months, so it can be a quicker way of becoming debt-free.
- You are not required to make any contributions during that time.
- Interest and charges are frozen.
- You will keep any assets, including your car — as long as it is valued at less than £1,000.
Disadvantages of a Debt Relief Order
- The DRO process cannot begin until the fee has been paid in full.
- As a formal arrangement, a DRO must be applied for through an authorised representative.
- You cannot enter into a DRO if you have an existing IVA or bankruptcy order.
- You cannot apply within six years of a previously accepted application.
- If your financial circumstances change within the 12 months, the DRO can be revoked.
- Your details will be added to the Individual Insolvency Register, and the DRO will stay on your credit file for six years.
How Does a Debt Relief Order Work?
A DRO is set up through a DRO advisor and the Insolvency Service. It allows all payments, interest and charges to be frozen for 12 months. Once this process has started, your creditors are no longer allowed to pursue you for payment.
There is a £90 set-up fee, this can be paid gradually, but the process will not start until it has been paid in full. After the 12 months is up, if you are still in a position that means you cannot pay your debts, they will be written off. Don’t forget, your DRO will remain on your credit file for six years.
Which Debts Can Be Included in a Debt Relief Order?
- Personal loans
- Credit cards
- Rent arrears
- Overdue utility bills
- Tax and National Insurance underpayments
- Benefits overpayments
- Telephone and broadband bills
- Council tax
Which Debts Can’t Be Included in a Debt Relief Order?
- Court fees or fines
- Student loans
- Social fund loans
- Child maintenance/support
How Do I Start a Debt Relief Order?
It’s always best to seek guidance before you begin the process of debt relief. Why not request a free call-back today, and one of our friendly team can help find the best debt solution for you.
You can’t apply for a debt relief order yourself, you must go through a professional DRO advisor or an organisation approved by the Insolvency Service. Debt Movement understands debt and what the Insolvency Service looks for when approving applications, so we can help point you in the right direction for your financial situation.
How Long Does It Take to Get a Debt Relief Order?
It takes up to 10 working days for the Insolvency Service to process a DRO application. Once confirmed, the length of the process is dependent on how quickly you provide the requested information that they need to continue.
How Long Does a Debt Relief Order Last?
A DRO will last for around 12 months. As long as your financial situation doesn’t change within this time, your debt will be written off once the DRO ends. If your financial situation improves within the 12 months and you are deemed able to pay your debts, the DRO can be revoked, and you will become liable to pay it back.
How Can Debt Movement Help?
Debt Movement has a team of knowledgeable, friendly guides that will help you to understand your options and find the debt solution that will get you on your journey to financial freedom. Request a free call back today!