What is a Debt Relief Order?
A debt relief order (DRO) allows people in England, Wales and Northern Ireland with low levels of debt and very few assets to freeze the money they owe. It isn’t available in Scotland.
For many, the DRO provides a much-needed break from the stress and anxiety debt can cause by stalling outstanding bills, loans, and interest for 12 months. If their circumstances remain the same after that period, these debts are wiped completely.
But using a DRO will impact your ability to borrow money in the future. If you’re a property owner and want to pay off your debts without damaging your credit score, we can help sell your home quickly. If necessary, getting funds into your account in just seven days.
Who qualifies for a debt relief order?
There are certain criteria you need to meet to apply for a debt relief order:
- You must owe no more than £20,000.
- After paying tax, national insurance, and normal living expenses you should have less than £50 to spend a month.
- You have lived or worked in England, Wales or Northern Ireland in the past three years.
- The items you own and your savings are worth less than £1,000 in total. This excludes basic household items or tools you need for your job.
- You’ve not had a debt relief order in the past six years.
- You do not own a home.
What debts will it freeze?
A range of debts are covered by a debt relief order, including credit cards, rent arrears, utility bills, tax arrears, benefits overpayments, hire purchase costs and business debts.
However, you’ll still need to pay any fines relating to criminal activity, child support, student loans or compensation you may owe.
Some things to consider
There are pros and cons to debt relief orders, it’s important to understand all of them before committing to applying for one.
On the plus side, a DRO is a low-cost alternative to bankruptcy and doesn’t require an appearance in court. Your creditors can’t pursue you for the 12 months of the order and in the end, your debts are completely written off unless you are able to pay them.
But there are downsides too. For example:
- You’ll have to return any hire purchase goods you own such as a car.
- The DRO will stay on your credit record for six years which will impact your ability to borrow money and buy or rent a home.
- Landlords can still pursue your eviction.
- If you run up new debts while under a DRO you could face a bankruptcy order.
There are restrictions while you’re under the debt relief order too. You can’t borrow more than £500 without disclosing to the lender you have a DRO and you can’t manage or set up a limited company. Your name will also be included on the insolvency register, which can be viewed by anyone, for the duration of the order and for the following three months.
How to apply for a debt relief order
You’ll need to get in touch with an official debt advisor – sometimes known as a DRO intermediary – to apply for an order. Organisations such as The Citizens’ Advice Bureau and charities including StepChange and National Debtline can put you in touch with one.
They will help you complete your application and send it to an official receiver, that’s someone who works for the UK’s Insolvency Service. In the application, you’ll need to list all your debts, everything you own and all your incomings and outgoings. It’s important to be as honest and open as possible when filling it out.
You’ll be charged £90 to apply. The official receiver will look into your financial affairs before assessing and managing your application. Once your application has been sent it’ll be processed within 10 days.
When to work with us
If you own a home you can’t apply for a debt relief order, because it counts as a valuable asset that’s likely to be worth more than £20,000. But by working with us you can realise the value of your home quickly to pay debts and give you a new start.
We’ve been buying homes of all sizes, shapes, and values across the UK for more than three decades. Our service is all about putting the funds you need in your account as fast as we can with as little fuss as possible.
We can complete a sale in just seven days, which means you’ll have access to funds quickly and won’t have to make mortgage payments while waiting for the sale to go through. What’s more, there are no estate agency fees to pay and we’ll cover all the legal costs that come with selling a home. And because we buy homes using our own cash, there are no other buyers involved to cause costly delays.
Not only do we have the expertise to buy your home in a short space of time we have experience dealing sensitively with a variety of home selling situations. That means we understand both the practical and emotional challenges you could be facing.
If you think we can help, we’d be happy to chat.