Debt Relief Order

If you owe £20,000 or less and you’re struggling to with your debt repayments, a debt relief order (DRO) could be a good option to help you get in control of your finances. However, you’ll need to meet certain eligibility criteria for a DRO and this isn’t the best option for everyone; as with any debt solution you should take expert advice before making a decision.

Before formally entering into a DRO, it’s important to seek expert advice. Remember – just because you recollect entering into a credit agreement or purchasing specific goods using borrowed money, this does not mean the creditor has followed all of the rules of fair lending and can actually prove you owe them anything.

Get in touch with CLB Direct for trusted legal advice on your debt options. We will represent you and demand that all of your creditors prove (just as they would need to prove to a court) that what they claim you owe is in fact due. In the vast majority of cases (more than 95%), these companies have not been able to prove anything is owed by our clients. Call us on 0330 124 4252 or email hello@clbdirect.co.uk.

CLB and Individual Voluntary Arrangements (IVA)

What is a debt relief order?

A DRO is similar to bankruptcy; both are binding orders of the court which must be followed by both debtor and creditor. Debt relief orders are a simpler, cheaper and faster alternative to the bankruptcy process which are designed for individuals with lower debts and few assets. Unlike bankruptcy, not everyone is eligible for a DRO; this solutions is only suitable for someone with debts of under £20,000 who do not own their own home.

Only certain debts qualify for a DRO. These include credit cards, loans and overdrafts, plus rent or bills arrears. Business debts can also be covered by a DRO, as can benefits overpayments and money you owe to friends and family.The debts that can’t be covered by a DRO include child support and maintenance, student loans and magistrates court fines.

Once a DRO is in place, your creditors can’t chase you for repayment. The only exception to this is if you’re behind on rental payments, in which case, your landlord can still take action to evict you.

Just like bankruptcy, a DRO usually lasts a year. During this time, you’ll be subject to certain restrictions on your financial affairs. After this time, the DRO will be lifted and your debts written off.

Debt relief order eligibility and how to apply

In order to apply for a DRO, you need to meet certain criteria. The most crucial of which is that your debts must be under the £20,000 threshold. If you meet the DRO eligibility criteria, you can apply to the Insolvency Service through a specialist DRO adviser.

DROs are designed for people who don’t own their homes and who don’t have much spare income or have assets of significant value. If you have assets or significant spare income at the end of each month you would need to consider other debt solutions such as a debt management plan.

If you’re struggling to repay what you owe, this could be a good way to tackle your debts, however, it isn’t the only debt solution to consider. It is important to remember that a DRO is a formal insolvency solution which will have serious and long lasting consequences on your life. It is very important to seek expert advice and consider all of your options carefully.

Is a debt relief order right for me?

A DRO can give you a relatively quick route out of debt. It will also prevent creditors from chasing you, which can relieve the stress and pressure that is caused by debt. After the DRO is lifted, you will be able to make a fresh start, free from debt. You won’t have to pay any of the debts included in the DRO.

But just, like bankruptcy, DROs come with a considerable number of disadvantages; you should consider the impact of these carefully and take impartial advice before making a decision. For example:

  • It will affect your credit rating for up to six years, making it more difficult and expensive to get credit
  • Your tenancy agreement could be affected; you may be evicted by your landlord
  • Your bank may close down your bank account
  • You’ll need to return any goods that were bought on hire purchase if there is still a balance due
  • It can affect applications for British citizenship or your immigration status.

While your DRO lasts, you’ll have to comply with a number of conditions and rules. For example: you cannot be a director of a limited company until the order is discharged (unless you have the specific permission of the court); your details will also appear on the public Individual Insolvency Register, which is a public record and anyone can view; you won’t be able to borrow £500 or more without telling the lender about the DRO (this will also appear on your credit report).

Can you help me?

If you are struggling with debt, it is important to realise that you don’t have to do face these alone. You can get expert legal advice from CLB.

Contrary to popular belief, your creditors do not have the power to make you pay them a penny. Only a judge can make you pay, and this can only happen if the creditor takes you to court, and wins. Using our expert knowledge of consumer protection legislation, CLB can stop that happening and protect your right not to pay.

We offer free, no obligation consultations with an expert adviser who will reviews your circumstances and recommends the best way forward. To find out more about how we can help you reduce your debt, call CLB on 0330 124 4252.

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If you’re IVA was mis-sold we can help you get the compensation you deserve.

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