Debt Relief Orders ~ Debt Managements and Consolidation

When people think of ways to resolve their debt problems there are a few options that always come to mind: Debt Management Plan, Individual Voluntary Arrangement or Bankruptcy. However there is another possible solution available, a Debt Relief Order.

A Debt Relief Order (or DRO) is sometimes referred to as BankruptcyLite. It is very similar to bankruptcy except it doesn’t hold as much stigma and it costs a lot less to do. A Debt Relief Order can only be authorized by a qualified intermediary, Payplan are one of few that can do this.

To answer that simply, no. In order to qualify for a Debt Relief Order you must owe less than £15,000, you must have assets worth less than £300 and you must have a monthly surplus less than £50.

You cannot apply for a Debt Relief Order if you are an un-discharged Bankrupt, have an Interim Order, or have a Bankruptcy or Debt Relief restriction order.

The first thing that you would do is obtain a copy of your credit report, check that they are all listed and add any that aren’t on to a list of your creditors and confirm how much you owe, you would then send that into us here you would then complete an income and expenditure form. Once this has been completed then you would need to go to the Post Office and pay the £90 for the initial application for the Debt Relief Order. Once this has all been done then your DRO application will go through and you will enter into what is called a moratorium period will last 12 months. During the 12 months you will be assigned an official receiver who will be asked to investigate your situation, your debts and your assets to make sure everything is correct and as it should be.

At the end of 12 months as long as everything is ok, then you will be released from your debts.

During the 12 month moratorium period your creditors can still add interest and charges onto your accounts. At Payplan we advise that you do not notify your creditors about the Debt Relief Order. All payments towards the debts listed should cease during the 12 month the moratorium is in place. This means that your creditors cannot take legal action against you (unless under exceptional circumstances) and will no longer chase you for payments as long as the order is completed successfully.

If your situation changes during the moratorium period then the official receiver would need to be notified and it would be your responsibility to do this. They would review your situation to see if the Debt Relief Order is still possible.

The Debt Relief Order will stay on your credit report for six years from the beginning of the process, the same as Bankruptcy, IVA and Default Notices.

For more information click here.

If you are struggling with debts then please call Payplan on 0800 2802816.

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