Introduction to Debt Relief Orders
A Debt Relief Order is a formal insolvency procedure for individuals with minimal assets and low income. It provides a way to have debts written off after a period of one year, offering a fresh start for those struggling with debt.
To be eligible for a DRO, you must have debts of £20,000 or less, assets of £1,000 or less, and a surplus income of £50 or less per month. You must also have lived or worked in England or Wales in the last three years.
How to Apply for a Debt Relief Order
To apply for a DRO, you will need to use an approved intermediary, such as a debt advisor or insolvency practitioner. They will help you complete the application and ensure you meet the eligibility criteria.
The application will require you to provide detailed information about your income, expenses, debts, and assets. You will also need to pay a fee of £90, which is payable to the Insolvency Service.
The Debt Relief Order Process
Once your application has been accepted, a DRO will be made and your creditors will be notified. This will prevent them from taking any further action against you to recover the debts.
During the 12-month period, you will be required to comply with certain conditions, such as not taking on new credit or disposing of assets without permission. If you fail to comply, the DRO may be revoked.
Debts Included in a Debt Relief Order
Most types of debt can be included in a DRO, such as credit card debts, loans, and overdrafts. However, some debts are excluded, such as court fines, student loans, and child maintenance arrears.
If you have any debts that are not included in the DRO, you will still be responsible for paying them. It is essential to seek advice from a debt advisor to determine which debts can be included and which cannot.
Conclusion and Next Steps
A Debt Relief Order can provide a fresh start for individuals struggling with debt. However, it is essential to understand the eligibility criteria and the implications of a DRO before applying.
If you are considering a DRO, it is crucial to seek advice from a professional debt advisor or insolvency practitioner. They can help you determine if a DRO is the right solution for your debt problems and guide you through the application process.
Frequently Asked Questions
What is a Debt Relief Order and how does it work?
A DRO is a formal insolvency procedure that writes off debts after a year, providing a fresh start for individuals with minimal assets and low income.
Who is eligible for a Debt Relief Order?
To be eligible, you must have debts of £20,000 or less, assets of £1,000 or less, and a surplus income of £50 or less per month.
How do I apply for a Debt Relief Order?
You will need to use an approved intermediary, such as a debt advisor or insolvency practitioner, to complete the application and ensure you meet the eligibility criteria.
What debts are included in a Debt Relief Order?
Most types of debt can be included, such as credit card debts, loans, and overdrafts. However, some debts are excluded, such as court fines and student loans.
How long does a Debt Relief Order last?
A DRO typically lasts for 12 months, after which the debts included in the order will be written off.
Will a Debt Relief Order affect my credit score?
Yes, a DRO will affect your credit score, as it will be recorded on your credit file for six years. However, it can provide a fresh start and help you rebuild your credit in the long term.