Debt Relief Order (DRO): Help & Advice.
Solution for England, Northern Ireland and Wales
May not be suitable for all. No loans provided. Fees and disadvantages may apply depending on the solution, Read here
*In the last 12 months our IVA partner The Insolvency Group achieved a write off of 70% or more of debts on over 50% of its cases.” Dated 29/07/2024
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Debt Relief Order (DRO): Help & Advice.
Solution for England, Northern Ireland and Wales
May not be suitable for all. No loans provided. Fees and disadvantages may apply depending on the solution, Read here
*In the last 12 months our IVA partner The Insolvency Group achieved a write off of 70% or more of debts on over 50% of its cases.” Dated 29/07/2024
Honesty and Integrity
We make a difference
How can a Debt Relief Order (DRO) help me?
A Debt Relief Order (DRO) writes off your included debts after 12 months, during which time interest and charges are frozen. You won’t need to attend court as your approved intermediary will submit the application on your behalf. Additionally, there is no fee to apply for a DRO. If you are struggling to pay your debts, this could be an option for you.
What is a DRO?
A Debt Relief Order (DRO) should only really be considered if your financial situation will not improve for at least a year. If your position didn’t change over this period, any debts included on the DRO are completely written off by your creditors.
While the Debt Relief Order is active, interest rates are frozen, and your creditors cannot contact you for repayment. You will also not be required to pay anything towards your debts over the period your DRO is active.
It is important you understand that a DRO will affect your credit score and therefore obtaining credit in the future might be difficult such as secure loans or additional lines of credit.
How does a DRO work?
A Debt Relief Order (DRO) is solution for individuals with low income and few assets, designed to relieve unmanageable debt.
To qualify, your debts must be under £50,000, you should have a monthly surplus of £75 or less, and assets valued at no more than £2,000, excluding essentials. The car value must be less than £4,000.
Applying through an authorised debt advisor, a DRO lasts for 12 months during which creditors cannot take legal action, and you don’t have to make payments beyond what you can afford.
At the end of this period, any remaining qualifying debts are typically written off, although the DRO will remain on your credit report for six years and impact your credit rating.
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Debt Relief Order FAQs.
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How can I apply for a Debt Relief Order?
A Debt Relief Order is only suitable for those who cannot realistically pay their debts, reside in England or Wales and aren’t going through another form of insolvency.
To apply for a Debt Relief Order, it must be obtained from an authorised approved intermediary. They will assist you in making the application.
The Debt Relief Order lasts for 12 months. During this period, if your financial position does not improve then your debts will be written of at the end of your DRO.
How long does the application process take for a Debt Relief Order?
Although the Debt Relief Order lasts for a year, the process to approve a DRO should take around two weeks. During this time, your application will be assessed, and a decision will be made as to whether it was successful. It is important to understand it may take longer than 2 weeks on some occasions.
Is a Debt Relief Order the same as an IVA?
An IVA and a DRO are not the same but do share a few similarities. For example, those on either solution will be added to the insolvency register and in most cases, creditors cannot take legal action against you.
However, there are several key differences between an IVA and a DRO:
- A Debt Relief Order remains active for a year while an IVA lasts for five years.
- An IVA allows you to have larger assets, such as a home or car.
- An IVA is generally a better choice if you’re earning. Usually, those on a Debt Relief Order must have less than £75 spare income per month.
- If you are considering a DRO or an IVA, it’s important l to seek specialist debt advice before committing to one solution.
What happens if my financial situation improves while I’m under a DRO?
If your financial situation improves significantly during the DRO period, you may need to inform your debt advisor. If your surplus income rises above the allowable threshold, or if your assets increase, the DRO could be reviewed. In some cases, this could lead to the DRO being cancelled or revised, meaning you might need to start repaying your debts. It’s important to stay in touch with your advisor and update them on any significant changes in your financial situation.
What are the DRO fees?
No fee is required for a DRO application in the UK
Eligibility of a DRO.
You must owe less than £50,000
You must not be a homeowner
You must have few assets, no more than £2,000
The car value must be less than £4,000
Your spare income must be less than £75 a month
You must be a resident of England, Wales, or Northern Ireland
Here are some typical examples.
Individual Voluntary Arrangement Example
Example case completed in 2024
Repayment calculated using income and expenditure data. Monthly payments and write off percentages are based on individual circumstances.
IVA is typically for a period of 60 months, depending on your homeowner status
Nominees fees £1,900 & Supervisors fees £1,750 = total fees £3,650, this amount is deducted from the repayment amount over the 5 year period
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DRO Fees.
Fees no longer apply.
Advantages of a DRO?
Your debts that are included in the DRO will be written off after 12 months
Interest and charges will be stopped.
You do not have to go to court as your approved intermediary will send your application for you.
There is no fee to apply for a DRO
Disadvantages of a DRO?
Your details will be kept on a public register for 15 months
A DRO will stay on your credit file for six years after it starts. This could make it difficult to get credit in the future.
If you break the rules of the DRO, your DRO could get cancelled.
You can not apply for a DRO if you own a property.
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As a proud member of DEMSA, we are deeply committed to maintaining the highest industry standards.
This commitment ensures that our debt management services are conducted with the utmost ethical integrity, transparency, and professionalism.
We strive to build trust with both our clients and creditors, providing solutions that not only meet regulatory requirements but also foster confidence in our approach.
Our adherence to DEMSA’s rigorous standards reinforces our dedication to delivering reliable, trustworthy advice and support throughout your financial journey.
Industry Standards
As a proud member of DEMSA, we are deeply committed to maintaining the highest industry standards.
This commitment ensures that our debt management services are conducted with the utmost ethical integrity, transparency, and professionalism.
We strive to build trust with both our clients and creditors, providing solutions that not only meet regulatory requirements but also foster confidence in our approach.
Our adherence to DEMSA’s rigorous standards reinforces our dedication to delivering reliable, trustworthy advice and support throughout your financial journey.
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