Debt Relief Orders

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Although the negative effects of uncontrollable debts are shared by everyone experiencing financial difficulty, the routes out of debt are not all the same.

If you are caught in debt but your circumstances mean you have few assets and unaffordable debt, then a Debt Relief Order (DRO) may be the best path for you to follow.

Although the negative effects of uncontrollable debts are shared by everyone experiencing financial difficulty, the routes out of debt are not all the same.

If you are caught in debt but your circumstances mean you have few assets and unaffordable debt, then a Debt Relief Order (DRO) may be the best path for you to follow.

DROs are available to those with debts below £30,000, with less disposable income to pay their debts with and limited assets. If you do not own your own home, you will be eligible to use this recovery solution.

It is highly recommended that you consult with a professional advisor before moving forward with this solution, which is where our dedicated team of highly-trained experts come in: ready to provide you with impartial and honest advice, towards an informed decision.

What is a Debt Relief Order?

A DRO is a method of debt recovery which allows debt to be written off, but as a form of insolvency it is a significant step to take. If the order is approved, your debts will be frozen for 12 months and, if your financial situation or ability to pay does not improve during that time, your debt will be written off at its conclusion.

DROs are available to those with debts below £20,000 who do not own their own home or other significant assets. These orders are only available to residents of England, Wales and Northern Ireland. If you are a resident of Scotland, you may need to explore other debt solutions, such as Sequestration or a Protected Trust Deed.

What does a Debt Relief Order entail?

During a DRO agreement, your repayments to creditors stop. All debt, interest, penalties and charges are frozen for 12 months, allowing you some relief from financial stress, as it prevents the total amount of debt from rising further.

At the end of this year-long period, your financial circumstances will be re-examined and an affordable repayment plan will be put in place. If, however, you are still unable to repay your debts after this period, your debt will be written off.

To establish a DRO, you will need the support of a debt professional with the authority to negotiate an agreement with your creditors on your behalf. Acting as the ‘approved intermediary’, they can guide you through the process and help put an agreement in place.

Creditors are most likely to approve this plan if they believe you will be unable to repay your debts.

Advantages of a Debt Relief Order

A DRO holds many benefits for those suffering financial difficulty, with limited resources to navigate their way out of debt.

These benefits include:

It is secure

A DRO will protect you from legal action by creditors or enforcement agencies, and prevent you from ending up in court.

It is affordable

The application fee is only £90, which may be paid either in a single amount or as part of a 6-month instalment plan, making it one of the most affordable debt solutions.

It protects assets

If you meet certain criteria, your assets will be protected, meaning, for example, that you won’t have to sell your car.

It is comprehensive

At the conclusion of the DRO, all debts included in the order will be covered.

Disadvantages of a Debt Relief Order

However, a DRO should still not be entered into lightly, as there are also many downsides associated with it.

One of our experienced advisors will make sure you are aware of any such disadvantages, which include:

Homeowners are ineligible

Even if your home is in negative equity, you are not permitted to obtain a DRO if you own your own home.

Your financial situation will be made public

By being granted a DRO, your name will appear in a public Individual Insolvency Register.

It could affect your work

A DRO could have an effect on your job depending on the industry and role you work in, also having the potential to impact your income and assets.

Will my debts be covered by a Debt Relief Order?

As with other debt recovery solutions, not all debts may be included in a DRO.

Among those not eligible are fines, social fund loans, educational loans, court fines and confiscation orders.

However, there are still many forms of debt which are included in a DRO, including credit card debt, loans, utility bills and store credit, as well as benefit overpayments, council tax, income tax and NI contributions.

One of our experienced advisors will inform you which of your debts are suitable for inclusion.

Is a Debt Relief Order the solution for me?

These orders are a custom solution for those with specific financial circumstances. If you fall into this category, it is likely that a DRO will be a suitable and successful option for you.

This solution is an affordable alternative to other debt recovery models and provided you are resident in England, Wales or Northern Ireland and owe less than £20,000 with assets of less than £2000 you will be eligible to use it.

Disposable income of less than £75 per month, after living costs, utilities and other expenditure is required. If this applies to you, our team is on hand to give you all the information you need.

How do I apply?

One of our panel of trusted advisors will determine whether you are eligible for a DRO, and, if so, guide you through the application process and wait for it to be accepted.

This advisor will act as your approved intermediary during the 12-month ‘freeze’ period, remaining continuously involved in the process.

If this sounds like the solution to your debt worries, speak with a member of our team today, to see if you qualify.