Our DRO experts have answered your most frequently asked questions below.
How is my disposable income calculated to see if I qualify for a DRO?
The intermediary who is appointed by you to submit your application for a DRO works to an agreed set of expenditure guidelines published by the Money Advice Service. These guidelines change from time to time so it is always worth checking with an FCA authorised debt counsellor or approved DRO intermediary to see if how they calculate your monthly disposable income.
Are any debts excluded from a DRO?
Yes - You will remain liable for debts which are excluded from DROs being
Court fines and monies payable under Court Orders made in family proceedings including child maintenance
Obligations to pay monies under Confiscation Orders relating to drug trafficking or proceeds of crime
Liabilities to pay compensation for damages caused by negligence, nuisance etc
Monies owed to the Department of Work and Pensions for budgeting loans and crisis loans
Secured debts - however if you own a property you will probably not qualify for a DRO.
You must also carry on paying ongoing bills for rent, electricity gas etc and you will have to pay any debts you incur after the DRO.
How do I apply for a DRO?
To apply for a DRO you must go to an approved intermediary. You can find a list of approved intermediaries at page 12 of "Guide to Debt Relief Orders" (hyperlink).
A fee of £90 is payable before when you make your application. Your intermediary will show you how to make the payment which must be in cash unless you are obtaining financial assistance from a charity who may pay by cheque on your behalf.
Who are 'Approved Intermediaries'?
Approved intermediaries are normally skilled debt advisers who have been authorised as being able to advise and assist people with the completion and submission of DRO applications.
What is the role of the Official Receiver?
The Official Receiver is a civil servant appointed by the Secretary of State and working for the Government's Insolvency Service. The Official Receiver's staff on behalf of the Official Receiver will assess your application for a DRO and administer it afterwards.
What information do I need to provide to obtain a DRO?
Provide the Official Receiver via your on line application form submitted by your intermediary with
a full list of your assets and liabilities, including the names and addresses of your creditors
full and accurate details of your income and your household expenses
Comply with the Official Receiver's request to provide information about your financial affairs and if asked you must co-operate with the Official Receiver by providing more information.
What must I do after the DRO is approved?
comply with any requests you receive from the Official Receiver for further information about your financial position
inform the Official Receiver of any assets you obtain (e.g money left to you in a will, a lottery win etc) or increases in your income.
not obtain credit of £500 or more without telling the lender first that a DRO has been made against you.
not make payments directly to any creditors included in the DRO.
How will a DRO affect me?
The DRO stops your creditors from taking any action against you for 12 months. If your financial position improves in this time you may be expected to recommence payments of your debts. If your financial position does not change at the end of the period of 12 months the debts will be discharged and your creditors will not be able to claim any more money from you.
What happens with my credit file after a DRO?
There are 3 main credit reference agencies in the UK being Callcredit, Equifax and Experian. These agencies hold information about most adults in the UK. This information is called your credit reference file or report.
The DRO will remain on your credit reference file for 6 years from the date the DRO is made. Normally the credit reference agencies will automatically remove the record of the DRO after 6 years but it is your responsibility to check this has been done and to take action to get it removed if not done.
Am I subject to any restrictions because of a Debt Relief Order
You must not obtain credit of £500 or more without telling the lender first that a DRO has been made against you.
If you carry on a business in a name which is different to the name of the business under which you were granted a DRO you must tell all those with whom you do business the name under which you were granted a DRO.
You are prohibited from being involved in promoting, managing or forming a limited company and you cannot act as a company director without the permission of the Court.
You cannot apply for another DRO for 6 years.
You can open a new bank account but before doing so you must tell the Bank you are subject to a DRO before applying for an overdraft.
Where can I get more information about DROS?
For more information about DROs please click the link: https://www.gov.uk/options-for-paying-off-your-debts/debt-relief-orders
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