Debt Relief Order Advice UK | Citizen Debt Helpadmin
Debt Relief Order: If you are struggling badly with various types of UK debts and want the debts to be written off, a debt relief order (DRO) can be a good option. It is specifically a favorable debt solution for people who have a comparatively lower level of debts preferably within £20,000 and they own very few assets. Mostly people with no sizable assets can opt for DRO.
Citizens Debt Help has a team of highly experienced financial advisors. They can guide citizens thoroughly to get Consolidation Loans and may also help with Writing Off Debt. If they find that the debt relief order will be the best-suited way to deal with your financial crisis, they will help you out. Although, debts relief order are not available to the citizens of Scotland.
DRO can even prevent many of the creditors from taking any strict actions against the debtors. Although, you need to declare the details of all other debts before applying for a DRO.
This section explains various featured of DRO and when it is the best way to repay the debts.
What is a Debt Relief Order UK?
A debt relief order UK (DRO) is the most preferred way of debt solution if someone is struggling with a relatively low level of UK debt. Along with that, they don’t possess many assets. One of the best benefits of repaying debt through debt relief order is the freezing of repayment amounts and the consequent writing off debts. DRO enables the freezing of the debt repayment and the related interests for a certain period, usually, 12 months called the moratorium period and writes off the remaining amount after the end of the repayment tenure. Thus, it ensures that one needs not to pay certain types of debts for that specified period of 12 months.
The writing off debts is only permissible if the financial status of the debtors has remained unchanged or worsened even after the tenure of repayment has ended. Then under such a scenario, all sorts of UK debts supposed to be repaid under the DRO will finally be written off. Citizen Debt Help has a team of highly experienced debt advisors who will help you go through the whole process of Debt Relief Order UK.Get Online Debt Advice From Our Professional Debt Expert
In case, the financial status of the person gets better over time, you may even choose to repay the debts faster and clear the debts. Then, you can ask to revoke your DRO and get your repayment completed sooner. Then, you don’t even need to request for writing off debt.
During the moratorium period of 12 months, the debtors are safe from any legal actions from the end of the creditors. During this period, the creditors won’t be able to take any action against you and once the tenure is over, you will get rid of all the debts listed under the plan of your debt relief.
We have a team of official receivers who will administer the debt relief orders through our insolvency services.
How does a Debt Relief Order work?
We understand the while you are struggling with the repayment process and planning for various UK Debt, choosing the right plan for yourself can be challenging. You may get confused and fail to figure out the right option. Thus, this section explains various technicalities of the DRO and how exactly it works.
Before you choose DRO as your debt solution, you must consider certain things. Only after consultation with experienced debt advisors, you should make the call.
The basic working process of the DRO can summed up as follow:
- Choose to apply for a DRO only if you owe comparatively low debts to your creditors and you don’t have many assets as well
- The DRO advisor will guide you thoroughly and help you plan out everything needed for your debt help.
- Based on your income and other expenses, DRO allows consolidation of your bills so that you can have lower affordable monthly repayment.
- It helps in freezing off the debts for almost 12 months.
- In case the financial situation of the debtors remain unchanged or get worsened at the end of the period, it can even write off till 85 per cent of the unaffordable debts.
- DRO has the provision that prevents the creditors, lenders, bailiffs from directly contacting you for debt repayment.
What are the advantages of the Debt Relief Order UK (DRO)?
If you plan to repay your UK debts though the debt relief orders, you can have multiple benefits. It is one of the best ways of debt help most because it involves minimal cost. Thus it is an easy and extremely affordable way for people struggling to repay a smaller amount of debts.
Some of the major advantages of DRO can be summed up as follows:
- Affordability and flexibility: If one plans to apply for the Debt Relief Order UK, he/she can easily do that. The application fee for a DRO is extremely affordable. The fee is just £90.00, which also needs to be paid at one go. The citizens have the freedom to pay the application fee in instalments over nearly six months. Thus, it is extremely flexible as well. But one needs to ensure that the whole amount is paid before the application begins. The process can’t be initiated until and unless the amount has been paid in full. One can either pay at a time or through various instalments
- Freezing of interests: One of the biggest advantages of DRO is the freezing of interests. Once an individual has initiated DRO as a way for a debt solution, all the interests and other related fees of the debts listed under your DRO will be frozen. This will be done for the entire period of 12 months. This tenure of 12 months is usually the repayment period.
- Protection of enforcement action by the creditors: Debt relief order protects you from any kind of hassles and chasing from the end of the creditors. Once an individual has his/her DRO approved a mode of debt solution, then the creditors can’t contact the debtor directly. Not only does it save you from the constant chasing of creditors, but it also ensures that the creditors could not get you in some kinds of legal complications. It binds the creditors from taking any legal action against you for the sake of debt collection. If any creditor listed under your DRO want to take sort of legal actions, he/she needs to approach the court. Only after the court permits any legal actions, then only they can proceed. Thus, DRO ensures your protection from any sort of legal enforcement.
- Writing off debts remaining: Once the period of 12 months for the debt relief order is over, the extra amount of debt will be discharged or written off. It is only done if you are still left with any amount to be repaid to the creditors listed under your DRO. Although chances are less, people will have debt remaining after the period. But in case, the situation doesn’t get better for the individual after the tenure has come to an end, the provision of DRO allows writing off debt for that remaining amount.
- Free from debt in a year: One of the best features of DRO is the short period for repayment. Within one year, all the debts listed under your DRO will be repaid and you will be debt-free. It is one of the fastest ways to get an escape from the stress of debts.
- Assets protected: There is a certain asset eligibility limit which is applicable when you opt for DRO. This limit may vary though. But usually, if the value of your assets is no more than 1000 and your car has a value not more than £1000, then they satisfy the limit. Under such a situation, your assets will be protected as DRO doesn’t demand mortgaging or selling of assets within the eligibility limit.
- No hassles of the court: You need not go to court for any official purpose under DRO.
What are the disadvantages of Debt Relief Order?
Like various other debt solutions, there are drawbacks and disadvantages of the DRO as well. Before you plan to opt for DRO, you must have knowledge about its probable cons.
- Large asset holder or homeowners not allowed: One who owns a house or has a good amount of other assets can’t opt for DRO as a plan for debt solutions. Even if your house has zero or negative equity, then also you can’t apply for DRO. In fact, your monthly disposable income shouldn’t be more than £50 and the debt amount should not exceed £20,000.
- Public accessibility to your DRO details: The details of your DRO will be recorded on Individual Insolvency Register, which is easily accessible to the public. This record will be available on public domain for the next three months even after the tenure of DRO is over. Thus, your record of DRO will be publicly available for almost 15 months in total. Even your credit file will have the record of your DRO for the next six months. Thus, there is always a probability that it may affect your credit even in future and you may even not get credits approved during this period.
- Only specific debt covered: DRO will allow you to only pay certain specific debts and not all debts you owe. Thus, even when you are under the plan of DRO for your debt solution, you may have to arrange the repayment for other debts, which are not under your DRO.
- Employment affected: If someone is under the process of the DRO, then they can’t be a part of any management team of any organization without the permission of the court. It also prevents any sort of promotion or getting into a managerial role or even getting into entrepreneurship without the court’s consent.
- No multiple DROs: One can’t avail a DRO more than once within six years. So, if you have availed DRO as your debt solutions, you can’t apply again for it for other debt in the next six years.
Debts covered under a citizens advice Debt Relief Order
Not all types of debts can be repaid with the help of DRO, nor there is the provision of consolidation loan under DRO for all debts. Thus, there are only a few debts that can be listed and be written off under it. The debts which can be listed and written off if the situation remain unchanged are:
- Arrears on various household bills including rent, gas, electric, telephone and council tax.
- Hire purchase (HP).
- Various Conditional sale agreements.
- Amount to be paid for items bought under buy-now-pay-later agreement or loans from acquaintances or family.
- Various consumer debts like credit card debts, pay-day loans etc.
- Benefit overpayments.
Debts not covered under the DRO
As mentioned previously, Debt Relief Order UK won’t help you deal with all kinds of debts. DRO doesn’t cover the following debts:
- Debt related to child support and maintenance.
- Debts or compensation for any sort of injury, health issues or death.
- Criminal fines and fines for confiscation orders.
- Student loans and social funds loans.
Although the DRO covers fraudulent debts, there is a separate provision for that. They can’t be written off even after the end of the moratorium period, even if there has been no change of the financial circumstances.
Is a Debt Relief Order suitable for me?
Since Debt Relief Order UK has several clauses and conditions involved, it is better to get an idea of them. Due to this, DRO can’t be a suitable debt solution for all the debtors who are struggling to repay their debts. Thus it is important to figure out whether you are eligible for the DRO or not. As per the rules and regulations of the DRO, it can only be the probable debt solution for those who are residents of England or Wales, for at least the past three years. Moreover, the residents should not have the record of being bankrupt previously nor they should have availed DRO in the past six months.
The total amount of debt that has been listed under DRO should not be more than £20,000 and the value of the assets possessed by the person should not be more than £1000. You can’t apply directly to the Insolvency Service for the DRO, rather you have to proceed through the approved insolvency organizations.
How to get or register Debt Relief Order?
Applying for the debt relief order UK and following the process thoroughly need some guidance from an advisor. Following steps should be followed to get opt for DRO.
1. Getting in touch with a DRO advisor: You can’t apply for DRO independently. You need to contact a DRO advisor to opt for the insolvency service. They will verify all your documents and analyze your situation before recommending you proceed further.
2. Apply for the DRO: If your advisor finds you eligible for the DRO they will help you make the application. They will even ensure that it doesn’t affect your other financial commitments. The official DRO receiver receives the application and cross-checks everything before approving it.
3. Paying the fees: To complete the application you have to make a payment of £90 either at the post office or at Pay zone outlet. Although, this amount won’t be refunded even if the debt relief order register/ application gets cancelled later.
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We have an experienced team of financial advisors who will help you throughout the process of DRO if you are struggling with various UK debts. You can get in touch with our team of DRO advisors who will analyze your financial status to check your eligibility to apply. They will then draft the plan of debt relief order register accordingly so that you can have maximum benefit and you are debt-free. They will coordinate with your creditors as well to ensure the process runs smoothly.