A DRO or Debt Relief Order is meant to solve your personal debt problems. You can apply for DRO through approved debt adviser, only if you meet the eligibility criteria.
Usually a DRO lasts for 12 months and if aproved you may stop paying towards debts listed in DRO at that time. After 12 months you will be free of the debts. DRO will stay on your credit reference file for around 6 years from the day of approval
You can get your eligibilyty checked for free by a debt adviser. They will assess your income, belonging and debts. If in case you do not know whar are your monthly expenses or debts, debt adviser will help you.
This is the eligibility criteria for DRO:
- your debt is less than £30,000 in total
- you have valuable items or savings less than £2,000 in total
- you have less than £2,000
- do not have enough money left to make your debt repayments
- have worked or lived in Wales and England in the last 3 years
- are not bankrupt, or have or individual voluntary arrangement or an interim order
- you have not applied for DRO in the last 6 years
To apply for a DRO
You will have to contact debt adviser to apply for DRO. The debt adviser will go through your profile confidentially and help you come up with the best solution. You can seek help from the adviser for free. If DRO is suitable for you then debt adviser will help to fill the application form. If in case DRO is not suitable for you the debt adviser will help you in finding some other solution.
A DRO will cost you somewhere around £90 and this is one-off administration fees. You will need to pay full fees before submitting the application. You can also pay payments in installments. At times some debt charities can also cover the cost.
Completing your application
If you meet the eligibilty for DRO then debt adviser will:
- calculate your total debt, possessions value and money left over each month
- check your payments to your creditors over the past 2 years
- ask you about any possessions you have sold or given away in the last 2 years
Debts that can be included in a DRO
Debts included in DRO as ‘qualifying debts’.
- overdrafts, credit cards, and loans
- utilities and rent arrears (electricity, gas, telephone)
- council and income tax
- benefit overpayments
- buy now – pay later agreements
- debts to friends and family
After you apply
A debt adviser will send the DRO application to Insolvecy service and they will:
- confirm your DRO
- guide you through the restrictions to follow
- tell you about any actions you need to take
- inform DRO listed creditors
- add your DRO to the Individual Insolvency Register ands
The DRO period
After DRO you need not make payments to creditors. DRO period lasts for about 12 months. In some cases DRO period can also be extended. In the end of DRO period it will be closed and you will not have to pay your debts back. You will not be required to pay the debts like bills an drent on regular basis.
Once you get the DRO you will be bounded by certian restrictions during the DRO period. If applying for overdraft you will have to inform the building society or bank about the DRO.
- borrow money more than £500 without informing the lender about your DRO
- write cheques if you do not have sufficient funds
- apply for another DRO for 6 years
Do not break any of the restrictions
During your DRO period remeber to not break any restrictions or else you may be prosecuted. If you happen to break any restrictions you will be extended for 2 to 15 years.
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