Debt Relief Order

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What is a Debt Relief Order?

At the end of your DRO, the scheduled qualifying debts listed in it will be discharged and you won’t have to pay them. If you obtained any of your debts through fraud, you will have to restart paying them when the DRO has ended.

You can check the date your DRO ended online using the Individual Insolvency Register, when your DRO (moratorium period) has finished, keep your order paperwork.

You might need to show evidence of your DRO order, especially if you are trying to get credit or update your credit record. Anyone can ask you for evidence of your DRO.

Worried about your Debt Relief Order?

If you are worried about how you are going to repay your Dent Relief Order, we’re here to help you! There are many people who will find themselves in a financial struggle and they will be looking to find a solution to their issue. Here at Business Helpline,  We can discuss all of your options and help you plan for a better future.
Call our team today on 0800 088 2142.

What is the cost of a Debt Relief Order?

The official receiver’s fee is £90. This must be paid at the time of the application and won’t be refunded once a decision has been made, even if you aren’t granted a DRO. You need to pay the fee in full before your application will be looked at.

The fee must be paid in cash. Some people are able to get a charity to pay their fee – your debt adviser can tell you more about this.

What are the benefits of a Debt Relief Order?

▪️A debt relief order can be a cheaper alternative to bankruptcy

▪️ You don’t need to pay anything towards your debts for 12 months. After the 12 months, they’ll be written off

▪️ Your creditors can’t harass you for your debts during the 12 month period

▪️ Although a DRO is a formal debt solution, you don’t need to appear in court

Will a Debt Relief Order affect my credit report?

A DRO will impact your credit record for a period of six years. This is because your credit report looks back over the past six years of your borrowing history. A DRO will therefore impact future credit applications. When you apply for credit, companies look at your credit information to decide whether to lend to you. Learn more about how you can access your free report here it will give you an idea of how companies see you, and how likely they are to approve your applications.

If you have a DRO and wish to apply for credit of £500 or more, you must inform the lender of your DRO.

What are the risks of a Debt Relief Order?

▪️ You can only qualify for a DRO if you owe less than £30,000 and live in either England, Wales or Northern Ireland

▪️ You’ll need to pay the Insolvency Service a one-off, non-refundable fee of £90. If you qualify, our specialist team can help you apply

▪️ You won’t be eligible if you’re a homeowner

▪️A DRO will appear on a public register and will affect your credit report negatively

Who is eligible for a Debt Relief Order?

DRO’s don’t suit everyone. You are only eligible for a DRO if:

▪️ You are unable to pay your debts

▪️ You owe up to a maximum of £30,000 only

▪️ Your assets aren’t worth more than £2000 in total

▪️ You have less than £75 to spend each month, after paying tax, national insurance and normal household expenses

▪️ You’ve not had a DRO in the last 6 years

What debts can I not include in a Debt Relief Order?

Most debts are included in a DRO. This includes household utility bills, council tax and consumer debt like credit and store cards. Some debts are called ‘excluded debts’. This means they’re not included in your DRO. The most common excluded debts are:

▪️Child maintenance

▪️Student loans

▪️Budgeting and Crisis Loans from The Social Fund

▪️Debts secured against an asset you own

▪️Damages or fines a court has ordered you to pay

▪️Unpaid TV license fees

▪️Any debts that you incur after the DRO is granted

▪️Fines for Drug Offences

Can a Debt Relief Order be revoked?

In certain circumstances, a Debt Relief Order can be revoked or stopped. This can happen if:

▪️you obtain property over the value of £2,000

▪️you have an increase in your income, meaning you have more than £75 left over each month after all your household expenses are paid

▪️you left out key information about your debts, assets or income in your application

▪️you didn’t tell the official receiver about a change in your circumstances that would affect your DRO

▪️you didn’t meet the eligibility criteria when you applied for a DRO

▪️you don’t co-operate with the official receiver

▪️you didn’t follow through with the restrictions placed on you by the DRO

▪️you secured your DRO fraudulently

Can I get a Debt Relief Order if I'm self-employed?

If you are self-employed and want to apply for a DRO, bear in mind that:

▪️You must not take out credit of £500 or more without telling the credit lender that you have a Debt Relief Order. If you are self-employed and your business relies on you being able to obtain credit for cashflow purposes, think carefully if it will be possible to continue to run your business with this restriction place on you.

▪️You cannot run a business in a different name without telling everyone you do business with the name that you used for your DRO.

▪️You cannot be involved with the promotion, management or formation of a limited company, or become a company director without getting permission from the court.

What happens when a Debt Relief Order finishes?

At the end of your DRO, the scheduled qualifying debts listed in it will be discharged and you won’t have to pay them. If you obtained any of your debts through fraud, you will have to restart paying them when the DRO has ended.

You can check the date your DRO ended online using the Individual Insolvency Register, when your DRO (moratorium period) has finished, keep your order paperwork.

You might need to show evidence of your DRO order, especially if you are trying to get credit or update your credit record. Anyone can ask you for evidence of your DRO.

Get in touch

If you are unsure whether refinancing this pathway will be right for you, don’t hesitate in contacting us.

Call one of our compassionate experts at 0800 088 2142.

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Are you eligible to claim Director Redundancy?

As a Limited Company Director you may be entitled to claim Director Redundancy – Average UK claim is £9,000*.

Debt Relief Order FAQs

Can a Debt Relief Order affect my tenancy?

An IVA (individual voluntary arrangement) is normally only suitable for people who are struggling to maintain payments to their current debts and have a regular income.

In order to get an IVA, you must have spare income after you have met your essential living costs each month.

Your creditors will be obliged to agree to an IVA if you meet the other criteria needed to get an IVA plan. Your insolvency practitioner will be able to offer you more specific advice once they know your circumstances.

In order to qualify for an IVA, you must reside in England, Wales or Northern Ireland. You will also need the minimum requirements:

▪️ Have £5,000 or More of unsecured debt

▪️ Owe money to two or more creditors

▪️ Live in England, Wales or Northern Ireland

▪️ Maintain a payment of a minimum of £70 per month

Can a Debt Relief Order affect my bank account?

Unless your bank is listed as a creditor, your bank will not need to be informed of your DRO. However, if your bank is listed as a creditor or if they find out you have one, they may decide to freeze your account.

Additionally, having a Debt Relief Order on your financial record will make it difficult to open up a new bank account. Because of this, most banks will only offer you a basic-style bank account. This means that you will not be provided with an overdraft or other such financial benefits.

Of course, all banks are different and have their own policies to what they will offer customers with a DRO.

Can a Debt Relief Order affect my job?

A DRO should not affect your current job as your employer does not need to be informed. Furthermore, a DRO will not damage your future job prospects unless you are intending to be the director of a company. Just like bankruptcy, a DRO prevents you from being a company director as well as managing a business.

The only exception to this circumstance is if you are able to gain permission from the court and also inform those that you intend to do business with of your DRO. These restrictions are only in place for the duration of your DRO (which is usually a year).

Is my partner affected in a Debt Relief Order?

If you and your partner both have debts and would like a DRO then you each have to apply for one individually – there is no such thing as a joint DRO.

If you have a DRO and your partner doesn’t, then they will become fully responsible for any previously joint debts that you had together (much the same as bankruptcy). This applies to things like council tax arrears, not just a joint bank loan.

A Debt Relief Order does not affect the credit rating of anyone living at your house unless you have any joint financial products with them, such as a joint bank account.

Can I keep my car in a Debt Relief Order?

In order to qualify for a DRO, your total assets cannot be worth more than £2,000 .if you live in England, Wales or Northern Ireland.However,  you are permitted to also own one domestic vehicle worth up to £2,000 on top of this.

You’ll need to provide details of your vehicle including the make, model and registration number. Your vehicle’s value will then be checked and if it appears to be worth more than £2,000, you will then need to issue valuations from two different motor dealers.

If you own a vehicle that’s used for business purposes only, it’ll be counted as part of the total assets you’re allowed. This means that if your business vehicle is worth more than £2,000, you won’t be eligible for a DRO.

If your vehicle has been specially adapted to help you with a physical disability, the £2,000 limit doesn’t apply.

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