Debt Relief Orders

A Debt Relief Order (DRO) is a formal, legally binding order granted by the Insolvency Service in circumstances where you cannot afford to pay off your existing debts.

If you successfully obtain a Debt Relief Order, none of your creditors can take legal action against you to recoup their money back. This lasts for as long as you have the DRO, which is usually about a year.

At the end of this time, all the remaining unsecured debts included in your debt relief order are written off.

Do I qualify for a Debt Relief Order?

You may apply for a debt relief order; however you must have debts of less than £15,000 and a low income. As you cannot apply for a DRO directly, you will need to make contact with an authorised advisor who will apply for a DRO on your behalf. Initially, your advisor will check whether you meet the conditions for the DRO. For example, you cannot apply for a DRO if you own items of value or, have savings of over £300.

• You are struggling with your minimum contractual payments to your creditors
• You owe no more than £15,000 to your debtors
• You have a disposable income of £50 or less a month after paying all your normal household bills
• Your assets do not exceed £300
• Your motor vehicle, if you own one, is worth £1,000 or less (unless you have a physical disability and it has been specially adapted)
• You must not of had a Debt Relief Order within the last 6 years
• You must not of been involved in any other form of insolvency when applying for a Debt Relief Order

What are the qualifying debts for a Debt Relief Order?

Not all debt types can be included within a Debt Relief Order, only certain types of debts qualify such as:

• Credit Cards, Overdrafts, Personal and Bank Loans
• Rent, utilities, telephone and council tax
• Benefit Overpayments and Social Fund Loans
• Hire Purchase agreements
• Buy now-pay later agreements

A DRO doesn’t cost as much to process as Bankruptcy, however to proceed with a DRO you will incur a cost of £90 which is a one off fee payable to the Insolvency Service.

Your authorised advisor will check your details to see if you meet the conditions to apply for a DRO. These are:

• Court fines and confiscation order
• Child support and maintenance
• Student loans

How to apply for a Debt Relief Order

Only an approved third party or an intermediary can apply online for a Debt Relief Order on your behalf. This is usually someone who is a skilled debt advisor and has been given permission to complete the necessary forms and give advice – they are an authorised adviser.

Debt Relief Orders are granted by the Insolvency Service and administered by the Official Receiver. If your DRO is granted, it will be published on the Individual Insolvency Register. The register is open to the public and your name and address will remain on the register for fifteen months.

There is a cost of £90 to apply for a debt relief order. This fee must be paid in cash at a Payzone outlet. You could spread the cost over a six month period but the Official Receiver will not consider your application until the £90 fee has been paid in full. Once you have paid the fee and sent your application, the Official Receiver can make a debt relief order, providing you meet all the conditions.
When your debt relief order has been granted, you do not have to pay any of the creditors listed on the order. Your creditors will be informed about the debt relief order and they cannot take any action against you.

For further information, speak to one of Burgess Bowen Financial Management’s expert advisors who will offer confidential advice and will put you in touch with a licensed professional to arrange the Debt Relief Order. Please note that failure to adhere to a debt solution could result in further financial problems.