Debt Relief Order

A Debt Relief Order (DRO) is for those with debts of £20,000 or less with little to no income.

A DRO is set up through the Insolvency Service and DRO advisor. It allows for debts to be paused for up to a period of 12 months. Once you are in a DRO, you cannot be forced to make payments to your creditors, and they cannot contact you about the debts.

You will be charged a fee of £90 to apply for a DRO, but this does not have to be in one lump sum. Applications cannot be progressed until this fee has been paid.

If you are still unable to pay your debts after the 12 months, debts will be written off, and you won’t need to make payments towards them again.

A DRO is only available in England, Wales and Northern Ireland. Those seeking help in Scotland may be able to apply for a similar solution called a Minimal Asset Process (MAP).

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Is a Debt Relief Order a good idea?

A debt relief order can be a valuable means of paying off debt when an individual does not have many assets at hand. For example, someone who owes below £20,000 in debt and does not own a home or many assets, would possibly prefer a debt relief order due to the protections provided.

What protections does a Debt Relief Order give someone?

This type of order ensures that creditors can’t place someone in a position to pay off all their debts. With most orders only lasting a year, it can also help write off debts when it expires. Again, this debt solution is only viable for those who would be seen as having no valuable assets at hand. If someone were to give away assets or sell valuables to acquaintances at a reduced price, they would typically be denied a debt relief order.

How does a Debt Relief Order work?

The order must be carried out by an authorised adviser like those here at Hillcrest Finance. An adviser completes the application by asking for information relevant to your debt. If the adviser finds that there are shortcomings, they cannot go ahead with the application.

The order application is then sent to an official receiver who decides whether to grant the request after checking all the information. After approval, the receiver tells your creditors & they can’t ask for money from you directly. If your financial situation changes in those 12 months, you have to tell the official receiver, as they may decide to revoke the order.

Can I get a Debt Relief Order in Scotland?

No. There are other orders in place to help freeze/pay debts similarly, such as a Minimal Asset Process or Debt Arrangement Scheme. The most appropriate debt solution for anyone in Scotland will be based on several factors, which is why it helps to talk with an adviser.

Advantages of a Debt Relief Order

A DRO may work for you as:

  • A DRO is a low-cost alternative to bankruptcy
  • Your creditors cannot contact you for your debts during the 12 months
  • You will not pay anything towards your debts for 12-months. If you are unable to pay after the 12-months, the debts will be written off
  • You will not need to appear in court if you enter into a DRO

Disadvantages of a Debt Relief Order

A DRO may not work for you as:

    • You can only apply for a DRO if you owe less than £20,000 and if you live in England, Wales, and Northern Ireland
    • You need to pay a £90 fee to the Insolvency Service, and this is non-refundable
    • You cannot apply if you’re a homeowner
    • Your credit rating will be affected, and a DRO is visible on a public register

Is a Debt Relief Order restrictive?

All avenues to repay debt are restrictive by nature. For DROs, restrictions in place stop an individual from taking over credit over £500, having a business under a new name, or setting up a limited company without the courts knowing.

How long do Debt Relief Orders last?

Debt Relief Orders are designed to last for 12 months, with your details on the Individual Insolvency Register (IIR) the whole time, staying there for another 3 months after the DRO ends.

What alternatives are there to Debt Relief Orders?

Alternatives that may be explored would include Bankruptcy, Debt Management Plans & IVAs. Knowing which to opt for is easier when you have help from debt advisers.

Get advice on Debt Relief Orders from experts

Want to know which debt solution will work best for you? Get in touch with Hillcrest Finance today. Our phone lines are open every weekday from 8 am. You can call us on 0141 478 0862, or get in touch via WhatsApp.

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