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Are you struggling to pay your debt?
If you’re struggling to make repayments and you qualify for a debt relief order (DRO), your creditors could freeze your debts and agree to write them off after one year.
We provide IVAs by our licensed insolvency practitioner regulated by the Insolvency Practitioners Association. We provide information about all debt solutions but we do not provide advice as we are not regulated by the Financial Conduct Authority.
What’s a Debt Relief Order?
A Debt Relief Order (DRO) is a scheme designed for those with debts up to £30,000 and less than £75 disposable income each month.
With a DRO, your debts are frozen for 12 months, during which time your creditors can’t demand money from you or add interest. The debt gets written off if your circumstances have not improved at the end of the 12 months. It is a form of insolvency; your name will be recorded on the insolvency register.
It is a scheme for non-homeowners and people with very few assets, so their belongings can not be sold in order to repay creditors. You must have no more than £2,000 worth of these assets – car, jewellery, etc. – in order to qualify for a DRO.
What Debts Can Be Included In a Debt Relief Order?
Most debt can be included in a DRO. Some main debts that are included are:
What Debts Can’t Be Included in a Debt Relief Order?
Most debts are included, however, there are certain circumstances where your debts are not covered and you will have to keep up payments towards. These include:
Advantages and Disadvantages of a Debt Relief Order
There are many factors to consider before applying for a DRO. Below we’ve listed some advantages and disadvantages:
What Will I Have To Pay?
When you apply for a DRO, there is a £90 one-off fee, and your case can not be processed until this is paid in full.
If your application is approved, you don’t have to make payments towards your eligible debts throughout the DRO, which lasts 12 months. At the end of the DRO, your debts may be written off, so you will not have to make any further repayments.
If your situation has improved at the end of the DRO, then this may be revoked and you will have to look into alternative ways of paying off the debts. This means the creditors may start contacting you and interest will begin to grow again.
You will also have to ensure that you keep up payments to any other debts that are not included in the DRO, such as child support, so as not to encounter further financial problems.
Is a Debt Relief Order Right For Me?
With any debt solution, you must know exactly what you are signing up for. We recommend researching different debt solutions, or seeking professional advice before making any decisions.
A DRO may be an option if you are a non-homeowner with a low debt level and can not afford to make any repayments towards your debts. There is also other qualifying aspects, such as not owning any assets worth more than £2,000, and have not taken out a DRO or other form of insolvency in the last 6 years.
To be eligible for a DRO, you must meet these criteria:
Similar to Bankruptcy, a Debt Relief Order is a debt solution that is used in the direst situations. It is an option given to those who can’t afford to go Bankrupt, have very little to pay off the debt, and has no remaining expenditure which they would use for life’s essentials.
Seek professional guidance
Speaking with financial experts and discussing in detail your current situation will allow them to decide whether you match the criteria for a DRO. If your financial situation proves to be suited for a DRO, you should be advised of alternative solutions.
Your DRO Application Form
After you have been proved to suit a DRO, you will then have to fill out an application form. Once completed, the form will then sent to the Insolvency Service for assessment.
The Insolvency Service
Once the Insolvency Service has granted you your DRO, your advisor will be in contact with your original creditors to inform them of the changes. For the following 12 months, they will not be able to demand repayments from you, and your debt will be written off.
12 Month Review
After you the DRO’s 12 month period has ceased, your financial situation will be reviewed. If it has not improved and you are still not in a position to pay, your outstanding debts will be then made invalid. If things have improved either during or after the 12 months, then your DRO will be cancelled.
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Debt help without judgment
Talk to us about your situation, and we’ll let you know if an IVA may be a potential solution for you.
No Obligation Service
We can carry out a debt suitability assessment, and if you qualify for an IVA we can help put together an application with you. There’ll be no obligation and we’ll be on hand to answer any questions you may have along the way.
In order to apply for a debt relief order, you need to go through a specialist who will assess your personal and financial situation to work out whether you qualify.
You will need to provide information such as:
Start by finding out if you qualify by answering the below questions
Both of these solutions are very similar in nature, with the goal being writing off your eligible debts. There are a few key differences between these:
Here’s some further information to consider if you are looking into a Debt Relief Order or Bankruptcy.
Both of these options can be good for those who are eligible. Here are some of the differences between the two:
Here’s some further information to consider if you are looking at an IVA or Debt Relief Order
Here’s some further information to consider if you are looking into a Debt Relief Order or Debt Management Plan.
Our team of experts help thousands of families get their finances back on track with an IVA.
*To find out more about managing your money and getting free advice, visit Money Helper, an independent service set up to help people manage their money.
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