There are many different ways through which you can start to relieve yourself from troublesome debt. A Debt Relief Order, or DRO, is one of the most accessible options for families and individuals on a low income.
It is a form of insolvency which is recommended by debt advisors and professionals if you are struggling to pay back money owed to banks, credit card issuers or otherwise. It is a great way to write off low levels of debt if you do not have the income or the assets to be able to clear the money you owe.
However, there are a number of things you should bear in mind when it comes to setting up a DRO for the first time. In this guide, we will take a look at the pros and pons of Debt Relief Orders, and will look at whether or not it is an option which is suitable for your particular situation and needs.
What is a Debt Relief Order?
A Debt Relief Order is used to help people in debt with low income and with few assets to their name – for example a car, a house, or any business assets.
- A DRO will effectively freeze both demands for money and any interest they may accrue for up to a year.
- This is set up so that no further action is taken over the course of 12 months.
- If, at the end of the 12-month period, your financial profile hasn’t improved, the debts will be written off.
- DROs appeal to many people because they offer debtors the chance to catch up with the debt they owe – and to find money within the space of a year. It’s often seen as a low-risk alternative to bankruptcy.
However, there are a numbers of boxes you will need to tick if you would like to know how to apply for a DRO. Providing you are on a low enough income and have few assets to your name, you will likely qualify – though it is always worth approaching these schemes with an open mind.
You may also want to consider other options such as entering into an IVA to manage your debts and make repayments more simple.
How to Get a Debt Relief Order
If you’re interested in knowing how to get a Debt Relief Order, your first port of call should be with local debt advisors who can point you in the direction of both a competent authority and the Insolvency Service. There are twelve different competent authorities in the UK who can process DRO requests, though you must always seek the support of a debt advisor to check whether or not you are eligible to apply.
- You will need to pay a fee of £90 to be able to apply for a Debt Relief Order. This is payable to the Insolvency Service.
- A debt advisor will be able to let you know whether or not it is worthwhile making an application based on your circumstances and needs.
- You will need to be resident in England, Wales or Northern Ireland, and will need to be on what is regarded as a ‘low income’. Your advisor will be able to let you know of your eligibility.
- DRO services are not available in Scotland at this time. If you are a Scottish resident, you will need to apply for a similar scheme known as the Minimal Assets Process (MAP) – which carries its own benefits.
- You’ll need to owe less than £20,000 in total. This is regarded as low-level debt, and as such, can be frozen for up to a year and written off if all parties agree.
- You cannot apply for a Debt Relief Order if you are a homeowner. This process is reserved for people on low income with little to no assets to their name. In many cases, your home may be used as an asset which can be tied to your debts.
DRO Application Form
A debt advisor will be happy to forward relevant DRO application forms to you should you be eligible to apply. An advisor will only ever start this process if it has been determined that a DRO route is most applicable to your circumstances and your ability to pay moving forward. You will need to pay your £90 with your application if you are applying from England or Wales, but if you live in Northern Ireland, you can pay when your application has been sent in.
However, if you live in England or Wales, you will be able to pay the £90 fee in instalments if you need to. In Northern Ireland, you will need to pay the full amount as a lump sum when requested.
Before you fill in your DRO application form, do remember that this process can impact upon your credit file and your ability to borrow money for some time. Therefore, it is always worth discussing such concerns with a debt advisor ahead of time. Your advisor will never suggest a relief option to you unless you stand to benefit from it!
How Long do Debt Relief Orders Take to Process?
Debt Relief Orders can take up to 12 months to process fully once your application has been handed in. During this time, you will be placed in what is known as the moratorium period.
Within this period, you will be restricted in terms of credit you can borrow – up to £500 without informing a lender of your DRO – and you will also be restricted in terms of running a business or acting as a director of a company, at least without court approval.
DRO Advice UK
If you are in need of DRO advice UK families and individuals depend upon, we’re here to help. Let us find you the best possible solutions to your ongoing debt without the hassle and stress.
A Debt Relief Order is a great way to freeze action – and it may be just what you need to get things straight and level. Call us today to find out more about how a DRO may be able to help.