Alternative Debt Solutions
Bank Loan Debt
Payday Loan Debt
Credit Card Debt
Store Card Debt
Mobile Phone Debt
Council Tax Debt
A Debt Relief Order (DRO) should only really be considered if your financial situation will not improve for at least a year. Assuming your position didn’t change over this period, any debts included on the DRO are written off.
While the Debt Relief Order is active, interest rates are frozen and your creditors cannot send demands for repayment. Furthermore, over the year, you won’t pay anything towards your debts.
It’s worth knowing that a DRO will harm your credit score and, for the foreseeable future, you’ll struggle to obtain loans and other financial products.
At National Debt Service, we specialise in IVAs and don’t offer Debt Relief Orders. Still, to find out just about everything about this option – as well as how an IVA may be better for you, continue reading.
To qualify for a Debt Relief Order, you’ll need to adhere to the following criteria:
As well as the qualifying criteria mentioned above, a Debt Relief Order is only suitable for those who cannot realistically pay their debts, aren’t going through another form of insolvency, and reside in England or Wales.
To apply for a Debt Relief Order, it must be obtained from an authorised person - usually an ‘official receiver’. They will assist you in making the application and charge £90 for their services.
The Debt Relief Order lasts for 12 months. However, if your financial situation improves during this period, it might be cancelled.
This restriction, as well as other requirements, means that Debt Relief Orders are not a suitable solution in all cases. After all, few can accurately predict what will happen in 12 months. For example, an unexpected windfall or change in job could all lead to the order being terminated.
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 verdict will be reached as to whether it was successful.
However, this timescale isn’t set in stone and – in some situations – a Debt Relief Order can take longer than ten working days to process.
A Debt Relief Order can be refused for the following reasons:
If your application is refused, the fee cannot be refunded. As a result, it’s vital to ensure the DRO is accurate being submitting. Furthermore, if you feel your application was refused in error, you could challenge the decision.
One possible alternative to a DRO is an IVA. Although a Debt Relief Order is not the same, they share a few similarities. For example, those on either solution will be added to the insolvency register and creditors cannot take legal action against you in most cases.
However, there are several key differences. For example:
Generally, a Debt Relief Order can be a preferred solution if you cannot afford to make any monthly payments and have limited assets. However, as everyone’s circumstances are different, it’s essential to seek specialist debt advice before committing to one solution.
A Debt Relief Order can help you control your finances – especially if you think your situation won’t improve within the year. However, get in touch today for a no-obligation chat and we’ll help determine if it is the right option for you.
Simply get in touch with our advisors through the contact form below and we’ll do our best to help.
A Debt Relief Order won’t stop bailiffs if you’ve made a previous arrangement with them – for example, through a controlled goods agreement. Furthermore, bailiffs can be used if you owe something on a hire purchase agreement. In the event of a DRO, creditors could still employ these individuals to reclaim goods.
A Debt Relief Order lasts for 12 months. If your financial situation hasn’t improved while the DRO is active, any debts included are written off.
To get a Debt Relief Order, you’ll need to make an application through a specialist DRO advisor and pay the accompanying administration fee. You can find one of these individuals at the following organisations.
Upon completion of a Debt Relief Order, any funds owed will be written off. This effectively leaves you in a position to rebuild your finances. However, your credit rating will be severely affected for at least six years.
During this time, you’ll probably be unable to secure loans or additional lines of credit.
Debt write off applies to unsecured debts and on completion of an IVA. A debt write off amount of between 20% and 80% is realistic, however the debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.
Call charges may vary depending on your telephone provider. All calls are recorded for training and compliance purposes, but deleted after 6 months for non-customers in line with GDPR guidelines.
Free money help and advice can be found at the MoneyAdviceService.org.uk