How to apply for a DRO?

A Debt Relief Order (or DRO) is aimed at those seeking help to become debt free, but who are also on a low income. Those with less than £50 remaining at the end of each month after essential expenditure and before debt repayment can apply, and most unsecured debt up to a value of £15,000 may be included. Those who apply must also have no assets totalling more than £300, so homeowners are likely to be excluded from DROs (it may be that an alternative, such as an Individual Voluntary Agreement, or IVA, would be more appropriate).

Who can help?

While DROs are administered by the Official Receiver through the insolvency service, in order to apply, the individual would need to approach an Intermediary (an approved third party, licensed to complete all the necessary paperwork and give further advice). There are a number of companies that can provide an intermediary service, some may charge, and there are others, such as the Citizens Advice Bureau (CAB) who can provide the service free of charge.

Application

The Intermediary will process the application on behalf of the applicant. They will request information relating to the applicants finances, and evidence of their circumstances, such as bank statements, evidence of the value of assets, utility bills and rent agreements etc. They will then be able to ascertain if a DRO is the most suitable option.

Fees

Assuming the application is in order, before the Official Receiver will even consider it, a fee of £90 must be paid. This can be paid at a 'payzone' outlet. It is possible to pay the fee in instalments up to 6 months, however the Official Receiver will still not consider the application until it has been paid in full. It is also worth noting that once the application is submitted, the fee cannot be refunded.

Once the application has been submitted and the fee paid, the Official Receiver will then review everything to ensure all is in order. Provided all the criteria are met, the DRO will usually be approved.

As ever, it is important for anyone considering a DRO that they seek advice from a licensed money advisor or from one of the free services available, such as the Citizens Advice Bureau, the Consumer Credit Counselling Service (CCCS) or National Debtline.

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