A Debt Relief Order (DRO) is often the best debt solution if you have under £30,000 of debt (this is increasing to £50,000 in June 2024), you are renting and you have hardly any spare money to repay your debts. You don’t have to make any payments in a DRO and, after a year, your debts are wiped out.
See What is a DRO? which looks at the eligibility criteria and how to apply for an overview.
Here are some common questions I hear about DRO applications.
Contents
Questions about eligibility and suitability
The DRO criteria are fixed numbers, not rough guidelines, and you will have to meet them all. Your DRO Adviser checks this and won’t submit your application if you don’t.
I’m self-employed, I make little money but it’s erratic
You can have a DRO if you are self-employed. Business Debtline are good people to talk to about your situation as a variable income can make it harder to judge.
My bank account often has a lot more than £75 in it so will the Insolvency Service reject a DRO?
This isn’t a problem. Your DRO adviser will do a proper check on your income and expenditure and if they say you meet the “under £75 spare income a month” test, then you are going to be fine.
I have applied for PIP but don’t know if I will get it
Tell your DRO adviser. If your only income is from benefits, this probably won’t matter. You have probably been spending less on some things than you should and the PIP will let you cover a lot more of the costs associated with the disability.
Even if you have other income it may be OK – although your income may be going up, your advisor can include extra disability expenses.
If you get a backdated amount when your PIP application is accepted, this won’t be a problem for your DRO. Backdated “premium” amounts that are added to other benefits when you get PIP can be a problem – talk to your DRO adviser about these.
Does it matter if I went bankrupt 4 years ago?
No. The DRO Unit of the Insolvency Service will only refuse your application because of previous insolvencies if you:
- are currently an undischarged bankrupt; or
- you are currently in an IVA; or
- you have had a DRO in the last six years.
I’m staying with friends but when I get a place to rent, I will have no money
Applying for a DRO at the moment probably isn’t a good idea!
I suggest you save up the money for a deposit and move out. Then you will know what your expenses are and what your surplus income is. Also, it can be simpler to find somewhere to rent without a DRO (or bankruptcy or an IVA) on your credit record.
You may well be right that you will be broke when you have moved, but getting yourself settled in a new home is your top priority. Your debts – and any DRO – can wait.
I’m going to retire in about 6 months, what about my lump sum from my pension?
If you get a large lump sum from your pension whilst you are in the middle of your DRO year, your DRO will probably be cancelled.
Unless you can postpone taking your pension until your DRO is completed, a DRO probably isn’t a good option for you. Talk to your DRO Adviser about this and about what your other alternatives are.
My maternity leave is ending in a few months – will this be a problem?
Your income will increase, but you may also get large childcare expenses, cost of travelling to work etc and your benefits may reduce, so you may still meet the DRO criteria. You need to talk this through with your DRO Adviser.
If returning to work will be a problem for your DRO, then you may have other alternatives eg part time work for a few months until your DRO ends
Questions about income, assets and expenses
I have a car on finance – does this count as an asset?
No – you don’t own it.
But read Cars on finance and DROs which looks at some complications with cars on finance and DROs. These may not be a problem for you, but you need to discuss this with your DRO adviser.
I don’t have any bank statements – does this matter?
Your DRO Adviser will want some proof of your income – if they ask for bank statements and you don’t have any, it’s usually easy to get one. Or they may be happy to accept wage slips and any benefits letters.
The Insolvency Service doesn’t need to see your bank statements.
Are student loans treated as income when applying for a DRO?
Student maintenance loans and grants count as income for a DRO. The loan you get for tuition fees is ignored.
If you are going to uni as a mature student, a DRO may well be a sensible option for you. But if you will finish your degree and get a well-paid job within the DRO year, a DRO may not be a good idea for you – talk to your DRO Adviser about this.
(As you expect to earn more in the future, students should generally avoid an IVA where your payments would increase a lot.)
Why do I have to say what my partner earns?
A DRO won’t be refused because your partner earns a lot – they aren’t going to be told to pay your debts.
You are being asked about their income so that it can be checked that the rent and bills are being fairly divided between you. If you earn the same, a 50/50 split would be normal.
We are both going to need a DRO – how do we divide up the expenses?
Expenses are usually divided in the same ratio as your income. So if you both have about the same income, you spilt the rent, council tax, and all joint household bills 50:50. If your income is twice what your partner’s is, you would be expected to pay 2/3 of the bills and your partner 1/3.
But you don’t have to sort these numbers out, get the same debt adviser to do both DROs and they will do all this.
My parents have been giving me money to help with my debts
Those are gifts and they could stop at any time. They don’t need to be reported on your DRO application as income because they aren’t income.
Is my car worth what I can sell it for?
You can get a valuation using Parker’s Guide, This gives a range of values for your car – talk to your DRO adviser who may agree that the bottom end of the range is likely to be acceptable.
I have a car registered in my name for insurance, but it’s owned by my mother – what will happen?
Tell your DRO Adviser but this should be fine. What matters is who owns the car, not whose name is on the insurance or the V5 registration. You will probably need to provide some proof about who bought the car.
I’m unemployed and I pay my mum £30 a week for rent and board – is this allowed?
That isn’t going to be a problem – it would cost you far more to rent a room privately somewhere else!
I’ve made an affordabilty complaint – should I delay until this is sorted?
Possibly but unless the refund will be large, it may be best to get on with the DRO now. Read “If I get a refund, what will happen to a DRO?” which looks at this in detail.
Questions about debts
Why do I have to get my credit reports?
You are being asked for a credit report so that your DRO Adviser can be sure all your debts are being listed. This is for your own protection – any debts which are not listed on your DRO application are not included in it and so you will still have to pay them.
What details are needed about the debts?
Who the current creditor is, the amount and the reference number. If there are several reference numbers – the original credit card number, a debt collector account number and another number on your Experian record say – list them all to be on the safe side!
Do I have to include my broadband/mobile/car insurance contract which still has over a year to run?
These are “service contracts” – you aren’t repaying a loan, just paying for a service, eg supply of broadband, throughout the year. You don’t generally have to include service contracts unless you are behind with the payments – in that case they do have to be included.
But you need to check with the adviser setting up your DRO that the payments will be allowable as an expenditure.
With a mobile contract, it may be set up as part loan and part service contract. In this case is it usually possible to include the contract in your DRO but keep the handset and then get a PAYG sim-only contract. Talk to your debt adviser about this.
I stopped paying most debts ages ago but still pay two catalogues – is this a problem?
Technically this is called “preference” – paying some creditors and not others. That may sound alarming, but it’s pretty common. Although the DRO Unit can refuse a DRO application if this has happened, they assess how serious the preference was. Most people don’t have a problem:
- if the preference was a while ago and before you took advice about a DRO, it matters a lot less – so from this point you must treat all your debts equally. For most people this means not paying anything to any of them. BUT don’t stop paying any priority debts without talking to your DRO Advisor first!
- if you had been paying a family member or a friend and not paying commercial debts, that is seen as more serious;
- paying the normal monthly amount to a mobile contract does not count as preference.
Talk to your DRO Adviser – they may not be concerned or they may suggest putting off a DRO application for a few months so the preference is further in the past. But if you have problems with bailiffs or other urgent reasons it may still be good to apply now.
I used my credit card last month – is this a problem?
This is another common situation. It does depend on why you used credit – paying for an essential car repair is much less of an issue than taking the family to Disneyland!
A DRO application won’t be refused because of this. It it is possible but rare that some extra restrictions may be imposed if the DRO Unit thinks you have behaved recklessly.
Talk to your DRO Adviser. Some DRO Advisers don’t like putting in an application unless you haven’t used any credit for several months, but if the amount was small, or for an urgent need, you may want to carry on with it.
Once you have decided to apply for a DRO you should not use any more credit.
I have a car on HP – is this debt included
Normally all debts have tio be included in a DRO but this is one of the very few situations where you have a choice. See DROs – what if you have a car on HP? for details and talk to your DRO adviser about this as it can get complicated.
I am repaying a Universal Credit advance – can this be included?
Yes. UC Advances are debts that should be included in a DRO. When the DRO is approved, any deductions from your current benefits for these should stop.
This also applies to benefit and tax credit overpayments. But it does not apply to Social Fund loans – these cannot be included in a DRO.
I’m confused about rent arrears
Rent arrears are a debt that has to be included in your DRO. But if you are still living there, you are allowed to carry on repaying the arrears and if you don’t, the landlord or Housing Association/Council may try to evict you.
Talk to your DRO Adviser about this – it’s important you get an affordable arrangement in place to repay your rent arrears in place.
This is one case where going to your local CAB for help with a DRO is good as they may know what policies local Housing Associations have.
I have cleared rent arrears and not paid other debts
Normally you have to “treat your creditors the same”. But this doesn’t apply to any priority debts such as rent arrears, council tax arrears, energy bills etc. Paying these a lot more than debts like credit cards does not count as a “preference” and won’t stop you getting a DRO.
Questions about the application
Who can help me with this?
It doesn’t matter who you go through, the DRO you end up with will be the same. StepChange is no longer setting up DROs, so I suggest:
- Citizens Advice – they set up more DROs than any other advice agency. They can also help with benefit advice and talking to your creditors if you have urgent problems with energy bills, bailiffs etc
- if you would prefer to talk to an adviser on the phone, call National Debtline on 0808 808 4000.
When my local Citizens Advice has checked my DRO do I then apply to the Insolvency Service?
No. Only approved intermediaries can submit an application for a DRO, you can’t do this.
Your DRO Adviser gets the information to go on the application from you and your credit records. You then have to sign to authorise them to send in your application.
How long does it take to approve a DRO?
It’s quick! Your DRO Adviser will usually get an email a couple of working days after submitting the application to say it has been approved.
You are sent a letter confirming this, called the Debtor’s Notice. It is posted the same day your DRO Adviser is told, so you usually get it the day after your DRO adviser knows.
Keep this letter safe, even when your DRO has finished, because it proves what debts are included in your DRO.
The Insolvency Register is also updated, showing your DRO.
How many DROs are rejected?
Only a tiny number of DRO applications are rejected – less than one in three hundred applications.
If your adviser has agreed to put your application forward, it is because they have already made all the checks and they don’t expect any problems.
How long do creditors have to object?
Creditors don’t have to agree to your DRO, there is no set time at the start for them to approve or object.
A creditor can only object if they think you didn’t meet one of the DRO criteria. This doesn’t happen very often, and then the DRO Unit have to consider if the objection is accurate – most of them aren’t. It is VERY rare for there to be a problem with this – you don’t need to worry about it.
I am just about to apply and I have been told one of my debts has been sold
Tell your DRO Adviser – they may want to change the application. This isn’t a problem, it’s just a bit of a hassle.
I’m just about to apply, literally days, and I have had a letter from a bailiff about council tax
From this point, it should be very quick, so you could simply ignore this letter, but tell your DRO Adviser and make sure your application has been submitted.
If a bailiff calls, do not open the door under any circumstances, not even to explain about your DRO. See Do I have to let a bailiff in?
Other questions
Do I need a new bank account?
If you have an overdraft, it will be one of the debts in your DRO – you can’t leave it out. You will need to get a new bank account, but there is now a good range of basic bank accounts to choose from, see Getting a basic bank account.
If you don’t have an overdraft, you will usually be able to keep your current account. NatWest and Halifax sometimes make you downgrade to a basic bank account from a standard current account.
Your bank isn’t told you have started a DRO. However some banks check the Insolvency Register daily and so will know that you have had a DRO even though they have not specifically been told.
Who is told I have a DRO?
Your creditors are told, your name is included in the Insolvency Register (which lists people with bankruptcy, IVAs and DROs) and a marker will be added to your credit record.
There is a procedure to not include your address on the Insolvency Register if you have had domestic violence or similar issues – talk to your DRO Adviser if you are worried about this.
Your partner isn’t told – but it is always a good idea to tell them yourself!
Your employer isn’t told unless you owe the employer money or unless you have an attachment of earnings in place (which will stop) in which case your employer is contacted.
Your landlord is only told if you have rent arrears.
Will a DRO affect my partner’s credit record?
Only if you have a joint bank account or loan with them.
Do I have to send in monthly statements?
No! No one checks up on your income and expenditure during the DRO year. Or at the end of the year.
Can I move abroad?
Yes – tell the DRO Unit your new address and you will still have to inform them of changes to your income and expenses.
No such thing as a foolish question
I hope I have covered many questions here.
But tell your DRO Adviser about any concerns or questions that you have. Not just about your current situation and the application process, but about what may happen in the next year. It’s much better to have this discussion before an application goes in.
Will more pay or a windfall affect a DRO?
Do debt collectors still phone after a DRO?
DROs and your credit rating
Deppi says
Not sure you are fully informed about UC and how your joint income affects the UC claim. I would suggest you ask some advice (for income, joint claim and how much UC you will get) at forum.scope.org.uk
Again, this is not about DRO, but I think with the income you have (as joint claim you and partner) you UC will be null. Please ask some advise at scope.
stu says
basically have two choices if we want to speed up our DMP and clear debts faster.one is I get new well paid job .I pay my own debts off fast..wife
gives up her job. becomes housewife and gets a dro.her dents written off after a year.
or we both drop hours to patime.we both do dros each.or we both do bankruptcy each. no IPA would be with bankruptcy cos part time wages too low..
stu says
did a hypothetical dro with a cab advisor. based on me and wife reducing hours.he said he would refuse it as he said we would still be short on money to live on without claiming UC and becoming full-time job seekers.i said and he agreed making a UC claim is not a legal requirement when making a dro request.we said we aren’t going back to full-time work. hence no UC claim . but he said we are negative £25 a week each if we drop our hours at work and don’t claim UC as job seekers. and hence he would not allow the dro application. I said I will save up money before the dro and live off it for 12 months. as long as it’s under £2000 in savings.plus my car is worth £800
Sara (Debt Camel) says
So go back to CAB and get them to look at your new job option. It sounds as though you may earn too much for benefits. And if your wife can’t get to work…
stu says
yes if I get new job and wife does dro possibly.but if I don’t want new job I can’t get or neither can wife get dto if we reduce our hours in our current jobs as we would be fractionally too poor according to cab guy .he said we would be in deficit of what we need to survive on. he said he wouldn’t do dro for us .he suggested getting UC on top of wages.but that would hold us in the job seeker agreement of getting or looking for full-time work.which we won’t want as it would end dro.and as I said we would get sanctioned for reducing our hours
so is it my right to tell the cab dro guy to go ahead with dro application.even if he says we won’t really have enough money to live off on ptime wages.but we can’t get dro on our current full-time hours.
Sara (Debt Camel) says
£25 a week short is not “fractionally” too poor. An adviser will be very reluctant to propose a DRO that will fail either because you have to apply for benefits and are then over the limit or because you end up borrowing money or you end up unable to pay priority debts.
I am sorry but you need to work through your options with an adviser, not me.
Keely says
Hi Sarah,
I am hoping you can point me in the right direction.
So i have 15k in debt over credit cards and catalogues. 8k of it is with newday and has caused the biggest problems for me.
I got intouch with SC for help & they said i didnt qualify for DRO & pushed forward with an IVA.
I have had no end of issues trying to sort out the IVA and it hasnt been submitted yet (i dont think) its been really stressing me out. Everytime they ask for something and i provide it something else then comes up. Been dragging on for weeks now.
But i am confused inregards to the DRO not being applicable for me.
I am on benefits due to disabilities. I have no assets other than my car. Its 2014 fiat and is around 3k. i had to get a car specifically that big due to my disabilities & having 2 children.
I cant walk anywhere i have to drive. Its automatic as i cannot drive a manual due to my conditions. It has to be high as i cant climb out of low cars, requires a big boot, I have to have a camping toilet in the boot at all times. Plus a pram. Wheelchair when i am at my worst. The car is far from good nick its scratches and dints and a wing mirror is literally screwed on so it cant move. But its essential for my use. Without it i would never be able to leave the house as cannot use public transport.
Sara (Debt Camel) says
All your income is from benefits?
How much do StepChange say you would have to pay in an IVA?
Keely says
They are saying i have £98 left which is not true by the end of the month im in overdraft or using credit cards for food.
I get UC, LCWRA, Child benefit and PIP.
All is classed as income. I didnt think my PIP would be included 😔 i need to buy a new walking stick but cant afford as the money goes on paying debts?
I explained all this but SC stated that its irrelevant? Is that righ? I have looked over docs etc online and there seems to be not set wording in regards to what type of car and its use can be excluded?
Sara (Debt Camel) says
Are you making payments to your debts at the moment?
How large are your debts and are they all consumer debts (credit cards, catalogues, overdrafts, loans) or are there a arrears on bills as well?
Have Stepchange said the problem is your car? or that you have “too much” spare income?
Keely says
I am behind on my aqua and vanquis. But i have on the others. I spent 1k of my 5yr old money to try and keep up on minimum payments. Thats when i knew i couldn’t do it any longer.
2 catalogs
5 credit cards
Newday being 8k of the 15k
I had to take out a credit card with 1 year zero on balance transfer to pay off 2.500 of my aqua to get ontop of it, but it never got better and i now owe both for the same debt because it lowered my minimum payment by about £20
I have never had issues before.
Stepchange said i didnt qualify for DRO because of my car.
Sara (Debt Camel) says
The car valuation – how did you get this?
An IVA is a ridiculous idea in this situation. You should not walk into a 5 year agreement to make monthly payments.
But a car can only be left out of a DRO if it is over 2k if it has been specifically adapted for your disability.
Is there any relative that could “buy” half of the car from you for £1500 so you only own half of it?
Another option is for you to offer £1 a month token payments to all of your debts and wait for the car value to drop below 2k. You can explain to the lenders that you would qualify for a DRO is it wasnt for the car, but you cannot manage without it because of your disability and family. https://debtcamel.co.uk/token-payment-debt/.
Keely says
The car valuation is from parkers as per the insolvency service website. I paid for a proper one because its in poor condition so the free valuation wouldn’t be correct.
I cant find clarification on what “adapted to you” means exactly. If they were to sell it and give me 1k for a replacement car i wouldnt be able to get one that would be suitable and meet the criteria i need.
Can i pull out of the IVR if it hasnt been sent to the creditors yet?
I dont have family who can buy half of it sadly. I paid off the HP 2 years ago and me and my husband are insured to use it. He is my carer and doesnt work he only gets carers. He is waiting for his practical test next year so he can do the driving due to my conditions being worse.
Sara (Debt Camel) says
So far as I know “adapted” means a change has been made to the car eg to accelerator, gear stick, loading, entering the car etc. Not that you have bought a car that is suitable.
Yes you can pull out of the IVA before it has been voted on. If StepChange say the only reason not to have a DRO is the car, then it’s likely you would Struggle to afford the IVA payments consistently for 5 years.
One alternative is a token payment plan for your debts. After a year review – the car may have fallen to be less than 2k. Or at that point you could consider asking the creditors to write off your debt – it’s too soon for this now, paying £1 a month for a year will make them more realistic about this.
Another option is to change to a motability car, which would be paid for from part of your PIP. Is that possible? If it was, you could sell the car, buy any things you really need and when the cash left is under 2k go for a DRO. If you want to do this it’s a good idea to start paying the creditors all £1 a month now so you re treating them all equally.
Keely says
I want to say thank you for your advice! I challenged them on the DRO and i told them to push it through regardless of their opinion, as the official receiver should review on a case by case basis. They asked me to get a quote for my car at a garage. As they had it up at 4.5k was actually worth 1.2k. My DRO was approved.
I am annoyed i had to fight it as hard as i did. The service i used for the DRO had me in tears arguing with me about submitting it. They had to get approval from senior management apparently. Yet it was approved after a simple quote from a garage re the car price.
John Connor says
Are debts from care home top-up fees covered by a DRO?
Sara (Debt Camel) says
is it the person in the care home that is eligible for the DRO? or have you signed a contract to be liable for someone else’s fees?
Maria says
Hi I defaulted on two accounts on 02/21 and 03/21 they were sold to Lowell who will now be issuing me a ccj. For the defaults to come off my credit file do I wait 6 years from 2021 or 6 years from 2023?
Sara (Debt Camel) says
Are you applying for a DRO? Asking because this page is about DROs…
Has Lowell started court action yet? Have you had court papers? or a Letter Before Action/Claim? or are they just threatening this?
Maria says
I have 7k debt it’s just this debt I’m unable to pay off. I’m not sure if it’s worth considering applying for dro so I’m contemplating. I’ve had court papers come through the door. A letter before action claim is what I’ve been delivered
Sara (Debt Camel) says
I think you should talk to your local Citizens Advice about a DRO which will be able to include these Lowell debts. Or National Debtline on 0808 808 4000 if you prefer to do this by phone.
If there is a CCJ, that will stay on your credit record for 6 years from the judgment date, even after the debts themselves have dropped off your credit record 6 years after the default date on the credit record.
This article https://debtcamel.co.uk/letter-before-claim-ccj/ looks at how to respond to the Letter Before Claim pack you have been sent. You can tick box C if you are planning to talk to a debt adviser about a DRO and also ask for more information by completing Box I. National Debtline can explain more about this if you talk to them.
Ali says
I’m on DRO and im self employed. I’m planning to go to abroad to see my children’s, I was wondering how long can I stay abroad? Since I’m in Debt Relief Order. A friend of mine who’s a pilot is giving me a free ticket to go and see my family.
Sara (Debt Camel) says
There is no time limit from the DRO point of view. All the rules about reporting a windfall or an increase in your income still apply – but you don’t have to inform the Insolvency Service if your income falls. Have a lovely time!
PS are you claiming benefits? They may be affected if you are Abroad.
kim says
Hi , i have been in my IVA for a year! i am thinking of cancelling and getting a DRO? how easy is this to do please? i have about £13000 in debt, no house and a car on HP. Council tax sent the bailiff round due to an old debt (i am up to date with them for this and last Year) because the bailiff were at the door i got scared and went for the IVA and didn’t know about the DRO?
Any advise will be appreciated.
Sara (Debt Camel) says
how large are your IVA payments? Are they affordable?
your car – is it on HP or PCP finance? when does this end? how much is the car worth?
kim says
it is £149 a month! no i struggle every month. The car is finance and does not end for another 16 months approx. It is worth around £3000
thanks
Sara (Debt Camel) says
One option is to talk to your IVA firm (who is it?) about getting this reduced at a more affordable amount.
Alternatively you can talk to national Debtline on 0808 808 4000 about whether they think you would be eligible for a DRO.
Kim Ottaway says
Thank you! IVA , I’m with is The Insolvency Group.
I am thinking of the DRO , I will call them tomorrow
Nigel Wilson says
Hi can do ,ore than 1 dro order
Sara (Debt Camel) says
you can have a second one after 6 years since the first one started.
Jen says
I am going to apply for a DRO in April 2024. I have an overdraft with my main bank which I understand will be included in my application. I also have a separate bank account with another bank which doesn’t have an overdraft. Can I use this account when my main account is closed?
Sara (Debt Camel) says
Some banks will close any accounts on a DRO even if there isn’t an overdraft. Your DRO adviser will be able to suggest if you should open a different account.
PS good news – from 6 April there will be no £90 DRO fee to be paid. it was scrapped in yesterdays budget.
kim says
Hi, i am in the process of applying for a DRO. I have a car, which is worth around £3000 but it is on Finance and i still have over 18 months to pay before the car is mine. The lady at National Debt Help has told me to get 3 valuations for my car. I explained it is not a asset as i do not own the car. is this correct, and will it stop me for being excepted for a DRO?
Sara (Debt Camel) says
“National Debt Help”
Is that the exact name of the organisation? Because there are several with similar names?
Unless it is National Debtline (0808 808 4000) you should probably stop talking to them immediately and switch to a non-commercial free sector debt advice service such as, well National Debtline. Or Citizens Advice. Or StepChange.
A change was announced in the budget this week saying that people can own a car worth up to £4000 in a DRO. That is from the 28 June (https://debtcamel.co.uk/dros-changes-2024-budget/). So from that date there will be no need for a DRO adviser to consider whether the car finance is an issue for a DRO application for you.
kim says
Hi, it was with National Debtline. they were very helpful but i was confused about the car thing. Oh that’s good, i will wait till June then … thanks
Sara (Debt Camel) says
No, go back to National Debtline now. It takes some time to get a DRO all organised, so say if the car value is a problem at the moment then you would like your DRO application to go in at the end of June.
Kim Ottaway says
Oh OK, didn’t realise I can do that!
Thank you
Kim Ottaway says
I am currently in a IVA , but I am trying to have it terminated so I can go for the DRO instead. Once they confirm I will go ahead and see about the DRO
Jake says
Hi i was advised by stepchange last year to continue to pay off a loan that i owed to my father whilst entering a token payment plan for the rest of my unsecured debts which amount to 37k. Now at the time i was going though a divorce and was going off advice in order to stay afloat. The loan has been settled now but when researching bankrupsy I discovered the preferential payment issue. I wasnt aware of this when I took the advice. Looking at the recent changes to the dro amounts I belive i will qualify apart from the fact that these prefferentail payments only ended in the last few months. Im getting mixed information on how long the or would look back some websites state 2 years. Would 12 months be enough for it to not be a issue on the dro application? Kind regards. J
Sara (Debt Camel) says
I suggest you talk to a DRO adviser about this – it may depend why StepChange gave you that advice. Phone National Debtline on 0808 808 4000.
Rebecca says
Hi I was approved for a DRO yesterday and it included a ccj. However as I missed payments on my ccj prior to this approval they took me back to court for an attachment of earnings. The court suspended this request as long as I pay £50 by 18th April. Do I still need to pay this now I have an active DRO?
Thank you.
Sara (Debt Camel) says
This should stop – see https://www.gov.uk/guidance/debt-relief-orders-guidance-for-debt-advisers#attachment-of-earnings and talk to your DRO adviser about this.
Dean Lemar says
Hi. After losing my career due to health I have found myself in dept with several credit cards. I’ve kept them up to date so far but have fallen into the trap of slowly using them to live, so now it means as soon as I get money (eg, from benefits or a small income I have managed to obtain) it’s straight/split between the cards and i Have reached a point where this can no longer go on. So I’ve decided to go for a dro, but first have a few questions:
1 What Happens if I keep 1 credit card with a minimum balance, and do not include it in my dro?
2 Do I have to provide a credit report?
3 Can I apply for a dro without falling into arrears?
4 I am also a director of a non profit of which I set up In 2021 shortly before needing emergency severe spinal surgery – due to two years of rehabilitation, etc, I never got the non profile up and running so it has never made money, but I have kept active as the plan is to eventually put work into it – Do I have to declare this and will a Dro effect such ?
Many thanks
Dean
Sara (Debt Camel) says
What Happens if I keep 1 credit card with a minimum balance, and do not include it in my dro?
All your debts need to be included.
The idea is that this treats all your creditors equally and gives you a clean start. Even a minimum balance will mean making minimum payments.
2 Do I have to provide a credit report?
the debt adviser that sets up the DRO will normally get credit reports as this helps them be sure that all debts are included
3 Can I apply for a dro without falling into arrears?
yes, but there is no point in struggling to keep up with these payments while the DRO is being set up. You want to treat all the creditors the same, so the simple option is not to pay any of them – but your DRO adviser will talk you through this.
4 I am also a director of a non profit of which I set up In 2021 shortly before needing emergency severe spinal surgery – due to two years of rehabilitation, etc, I never got the non profile up and running so it has never made money, but I have kept active as the plan is to eventually put work into it – Do I have to declare this and will a Dro effect such ?
talk to Business Debtline on https://businessdebtline.org/ about this
JT says
Hi, my case is with a DRO Officer at the moment what I wanted to know is, I am not working and not claiming UC or any benefits as my family has been supporting me. Will I still be eligible?
Sara (Debt Camel) says
do you mean you are talking to a debt adviser about a DRO?
why aren’t you claiming any benefits?
lee says
my partner and i have a “joint” ESA claim but he is the main claimant, how would i be able to prove income? the benefits go into his account and he transfers to the joint account, would this be a problem? would i be classed as having “no official income” ?
Sara (Debt Camel) says
Ask your DRO adviser what they need in this situation
Stuart says
questions, my wife and I fit the criteria for a drop each, she works part time, I’ve went from full time to part time. I own a very old car, but in a damp the car expenses are shared, eg mot , tax, insurance, repairs, as we both use it, does a dro put all the expenses into my name. plus we don’t want to claim UC it is worth £20 a week, but we are happy on our PT jobs, hence not full time job seekers, anyway I’d get sanctioned for 91 days for leaving. full time job.
and I had a lending stream loan for a very small amount for 20 days , 6 months ago whilst on my dmp, I paid it back. is that preferential treatment and wife did a discounted full and final settlement of £60 on a catalogue last month.when I didn’t know I was leaving full-time job,our debts are over £11000 each.
Sara (Debt Camel) says
who is the DMP with and how long has it been running?
no you don’t have to claim UC as a condition of getting a DRO.
stu says
running my own dmp for 6 months , previously was with stepchange for 3 years, I have about £1400 in savings and a £500 car, so even if my budget showed a slight negative deficit per month of say £40 , I could dip into my savings for 12 months?
plus how do you split car costs in a dro, cos in a dmp you share costs with wife, but in a dro , car is mines, thus are all car costs my expense???, what about the tiny lending stream loan I settled and the tiny drafts loan my wife got a full and final settlement on, are any preferential ? both done when on full time job.
Sara (Debt Camel) says
So you need to talk to a DRO adviser about whether you have a negative budget that is manageable. And whether those possible “preferences” matter. And how to split the car costs. My guess is if your wife needs a car for work then it’s reasonable to split them. In the meantime reduce the DMP payments you are making to token payments if necessary and don’t take out more credit or make any payments that could be seen as preferences from her on.
Stuart says
had a cab officer chat to me in the past , he said that the car was in my name hence I had higher expenses, not ,tax than wife even though she drove it to work, and it put me into a negative budget and would refuse DRO unless I claimed the tiny few £s we would get in UC!!!!
why token payments if our budget allows nothing , I’m trying to slow down any ccjs etc until I get our income and jobs sorted for 12 months
Sara (Debt Camel) says
I suggest you talk to someone else about a DRO then.
CCJs don’t make much difference if you are going for a DRO.
Max says
Hi.
For a DRO, is a list or any information available on what is considered an acceptable level of “essential expenses”? I’m working with CAB on a budget and at the moment (on paper) I have more than £75 spare, so I need to effectively increase my spending a little to meet the DRO criteria. I’m not sure what is acceptable as I’m living quite frugally and the CAB advisor hasn’t provided any guidance (I’m retired and receiving state pension and housing benefit only). Thanks
Sara (Debt Camel) says
What do you have down for groceries? new clothes? gifts? haircuts? entertainment? transport costs? replacing household goods? In the last winter were you restricting what you spent on heating to keep the bill down, because that is not healthy.
Max says
Thanks Sara – that gives me some ideas!
I included £80 weekly for groceries but only £35 monthly for new clothing (plus all regular direct debits and car expenses).
I didn’t consider gifts, haircuts or entertainment as being allowable expenses so I will add these!
Regarding replacing household goods, could I include a budget to buy curtains and floor coverings? (I moved into a housing association flat last year and don’t have any proper curtains, and the floor is bare as they ripped out the previous tenant’s carpet).
Thanks.
PS: Debt Camel is the best, clearest website to help understand about debt solutions!! It’s really helped me. Thanks so much!
Sara (Debt Camel) says
are you getting pension credit?
Max says
No I don’t get pension credit.
I receive I think what’s called the “new state pension” which is actually just above the threshold for receiving pension credit (so it only seems to be available for people on the “old” state pension which is less).
Sara (Debt Camel) says
are you currently up-to-date with payments?
Max says
Yes I’m up-to-date with all my payments for council tax and all other direct debits (but not the payments for £15k of credit card debt to two banks that I stopped paying month’s ago).
Sara (Debt Camel) says
are there still some other credit cards that you aren’t paying?
Max says
I my slightly confused by the question about not paying other cards, but I guess there is a reason for asking. Am I missing something? (I am mainly concerned about understanding “allowable expenses” for a DRO.)
To answer the question however, there are no other credit cards.
Sara (Debt Camel) says
I asked if there were other credit cards as if there are some you were paying, you need to stop so that all of your creditors are being treated the same.
yes you can include a budget for replacing household goods – in your case this means buying some new ones.
How much do you actually have spare once you have sensible amounts down for the other things?
George says
I have £39k of credit card debts. They all defaulted about 5 years ago. I am not currently making payments, my wife is now not working as we’ve just had a baby, she is not getting mat pay but she has some savings we have to dip into every month to meet our total outgoings, so on paper I have more outgoings than income depending on what I include as my outgoings. Not eligible for any benefits due to my salary.
This week 2 debts totally £19k I have received letter before claims for, both have long been sold to PRA.
I have no savings or assets. I was thinking of a DRO now the cap has been increased to £50k, but with it being so close to the defaults dropping off my report is there anything else I should consider?
I know I can request lots of info before the LBC’s become claims too, I already know both debts have enforceable CCA, they are not very old, so not sure what the likely outcome is going down that route if I have no surplus income to offer any payments will they go for the CCJ?
Sara (Debt Camel) says
Do you only have credit card debt? No car finance, loans, overdrafts…. Any debt you are still making payments to at the moment?
You have Asked for the CCA agreements or are you just assuming the debts are enforceable?
How large are your wife’s savings? Does she also have debts? Will she be returning to work, and if yes, what will your finances be like then?
George says
Now only these 5 credit cards that defaulted 5 years ago, I’ve not made payments to 4 of 5 since late 2021. The other Tesco one I’ve carried on a token payment till now.
I have had the CCA’s for all but the Tesco one that I’ve just requested recently. They were looked at for me on AAD forum, 1 of them which is £7k PRA confirmed is UE. 2 believed enforceable. 1 borderline is £13k. The LBC’s are for 1 enforceable and the borderline.
My wife has about £25k savings but withdrawing average £1200 per month to meet our outgoings. Plan would be for her to go back to work in about 12 months. She has no debts. We would have maybe a 500 surplus when she goes back to work but also other costs then childcare etc.
It’s worth mentioning also that I had a LBC about 12 months ago for the same £6k debt – I ignored it at the time and I didn’t hear anything further.
Excluding the UE debt I have about £32k debts- I could possibly get 40-50% of this figure from my parents if it clears all my debt. Not sure if they’ll negotiate though – 4 of 5 are with PRA totalling £33k which includes the £7k UE one. The other is Tesco with intrum now. If I can I’d like to try this route but how can I delay any court claims to give some time to negotiate, or perhaps they’ll hold off if I’m in contact?
Thanks for your help.
Sara (Debt Camel) says
The defaults dropping off your credit record has no importance to whether the creditor will go for a CCJ or not. You think one debt is unenforceable, three aren’t and one you have only just asked about… these debts becoming statute barred debets is unlikely with you getting LBCs and not making any payments.
You can “request lots of info” but only the CCA agreement is a simple route to the creditor not proceeding with the claims. Unless you fancy fighting these through the courts and then having to repay in full if you lose unless you want a CCJ on your record, then you either need to make a settlement offer now by asking your parents for the money (would this be a gift or a loan?) of give up on the whole thing and get a DRO.
If you want to get a DRO the sooner the better, as you want this finished before your wife goes back to work. You don’t have a lot of time to make these decisions and ask for more info that may not really help you.
Is it sensible to borrow / take a gift from your parents of 15k ish if you could simply get a DRO? Couldn’t that help from your parents be better used in a few years time when your wife is back in work and you have no debts, possibly as a the start of a house deposit?
Andy says
I am considering a Dro. I am currently on uc however I am self employed and will be coming off of it shortly. What I will earn will be enough to pay bills and general needs food etc. I have a business account monzo, Halifax- bills come out and top up uc. Not behind or use overdraft. I have a barclays with 2000 in. Pra have presented me with ccj and now a control warrant. Owe about 30000 with all other debts. What is my best option? Should I close barclays and take funds out? This is to support me in my new business and purchase a vehicle. This all happened due to losing job so iva collapsed and now getting myself off uc.
Sara (Debt Camel) says
I suggest you talk to Business Debtline on 0800 197 6026 https://www.businessdebtline.org/
They are specialists in advising the self employed on business and personal debts and can set up a DRO.
Ben says
Hello,
I am just after a bit of advice. I’ve been paying a DMP for 2.4 years now. All but 1 of my 5 debts totalling £23k have defaulted. I’ve recently undergone an updated budget and am in a position where a DMP is no longer a recommended option due to it taking >10 years to pay off.
I really struggle with the budget as I find it difficult to say how much I spend on say food, toiletries, clothes etc as, to be completely honest I have no allowance for clothes, no allowance for car maintenance, limited allowance for toiletries and feel like my food allowance is open to alteration…
I have been in several situations where in a month we’ve had to buy clothes and am left really struggling to put food on the table. In making my budget more realistic, I no longer qualify for DMP and have been looking at a potential DRO. Again, I need to fill in a budget and am just wondering what are acceptable values? Is there any guidance on this? We are a family of 3, Mum is. a stay-at-home mum and I’m working 2 jobs and training to ensure we can live.
I need to include things such as Car maintenance, clothes, and leisure in the budget but don’t know what is acceptable. Please could you advise.
Many Thanks
Sara (Debt Camel) says
who is your DMP with? what does the revised budget say you can afford to pay a month?
does this including anything for clothes? car maintenence?
how old is your child?
what do you have in for groceries? toiletries?
ben says
DMP is with StepChange. Revised budget says £69 but doesn’t include clothes, car maintenance, saving for gifts, child is 5. I initially had £500 in for food and groceries, but in honesty I’d like to go up as we Don’t smoke/drink or go out for food. Healthy fresh food is important to us. The budget probably needs revised again to be honest. I’ve just started a second job but reduced hours in another and waiting to settle into the slightly raised income although I know what it is.
I’m just not sure what is an acceptable budget for those other things.
Sara (Debt Camel) says
So StepChange told you that you were eligible for a DMP I assume as your budget shows a surplus of less then £75?
If you add in low amounts for clothes(60), car maintenence (25) and gifts (25) you have a “negative budget” – the fact you would like to spend more on groceries isnt really relevant because you have no spare money to do this.
Christina J says
Hi, my husband works and he got a mortgage 3 years ago ,I was looking after kids so he only did single application. I went back to work and recently had to take 25k loan to finance loan my patents gave us when we only had one income.In addition ro this I have various credit cards that I always transferred to zero interest about 20k. 6 weeks ago I was diagnosed with stage 4 pancreatic cancer and had surgery, no home but as a result not working and because self employed no prospect or working again.
Social worker suggested DRO or DMP. I have two questions , I get PIP and we have UC. Will they treat us as couple or separately fir application.Is 3 year mortgage in my husband name considered as interest in property? I always helped with some bills,never mortgage as he covered it. Don’t know what to do,dont want to leave my family in debt if I pass away :( even though I have 2 years prognosis. Will they reject DRO is loan was taken recently? So sorry for a long post.
Sara (Debt Camel) says
I am very sorry to hear that, what a devastating diagnosis especially when you have little ones.
How recent was the 25k loan? At that point were you undergoing any medical tests?
Christina J says
Yes no worries so about 5 months ,3 month paid and now we just won’t be able to pay it ,it will be now 2nd month’s I am nit paying amount. I hate owing money and this is giving me anxiety. This diagnosis cane out of blue and everything just happened fast :( no had no idea that I will.be diagnosed with Panc.canver 6 months ago and seeking to settle debts :( I don’t know what to do,just want to do best for kids and family. They suggested to call all lenders but I haven’t git a strength or time and my husband cannot do it as he is flat out. Thank you so much for finding a time to respond, means so much as it gets so confusing online and I am exhausted and anxious about the future.
Sara (Debt Camel) says
This loan – I want to double check it isn’t secured on your house? Who is the lender?
Christina J says
Oh no,it’s not secured on the house, it’s Sainsbury loan ,high interest.Its just in my husband name.
Sara (Debt Camel) says
ok well I am afraid there is nothing you can do about this. It isn’t your loan as its in your husband name. He has to ask for a low payment arrangement at the moment, because of your cancer diagnosis. Sainsburys are very likely to be sympathetic.
Ian says
Hi. Thank you for this website as it is proving very helpful.
I am thinking of applying for a DRO as I’ve been using my credit cards to live for a few months as I am a taxi driver and through illness I’ve not been earning much after expenses.
I have been paying the minimum payments to my credit cards for a couple of months but won’t be able to from this month.
I also have a car worth about 6500 but it’s on HP and I use it for my taxi.
I also agreed to take HP for my landlord and pay that and an agreed cash monthly sum in place of my rent as unsure as what will happen there as I don’t really want them to find out I’ve applied for a DRO. The car is in my landlords name so will they be able to keep it even if I lay full cash rent and they lay for the car?
One last question is do I continue to pay for a CCJ payment plan I set up recently if I’m not paying the other creditors? Thank you in advance.
Sara (Debt Camel) says
That landlord HP/rent issue is complicating. As is the value for the taxi. I suggest you talk to Business Debtline on 0800 197 6026 (https://www.businessdebtline.org/) – they specialise in debt advice for the self employed and people with small limited companies and they cover business and personal debts.
they can help you look at all your options, including a DRO.
Lucky Blue says
Hello. I had a DRO back in July 2020 which ended July 2021. For the first couple of years everything was going fine, I was budgeting well and saving and avoided any further debt. However, my abusive ex re-entered the picture in the last 18 months and my debt has been spiralling. I have 10 credit cards and 3 unsecured loans. I am in contact with StepChange to arrange a DMP.
I am also getting support from my local council, Police and health to deal with the ex.
Some questions:
1. Would I able to apply for a DRO in July 2026? This is 6 years after my first one. StepChange did recommend over the DMP but as far as I’m aware I would not be eligible u to 6 years after a previous DRO.
2. One of my credit cards only holds a small balance (£80) in comparison to my others (£1200) – does this have to be included in the DMP?
3. If I get to a stage where a DRO is an option, do I have to included credit cards that have a zero balance?
Sara (Debt Camel) says
1. Would I able to apply for a DRO in July 2026? This is 6 years after my first one.
yes
2. One of my credit cards only holds a small balance (£80) in comparison to my others (£1200) – does this have to be included in the DMP?
There are no set rules for a DMP, unlike DROs. I would say that in general it is better to include all your debts so you treat all the creditors the same. If you go for a DRO in a couple of years time, you do not want to have been seen to have “given preference” to some creditors and not others.
3. If I get to a stage where a DRO is an option, do I have to included credit cards that have a zero balance?
No. But you may find the lenders close the accounts.
BUT if these debts have been the result of economic abuse, I suggest that you think about asking the creditors to write the balances off now. See https://survivingeconomicabuse.org/i-need-help/debt/debt-write-off/
Jon says
Hi I’m in the middle of getting ready to apply for a DRO. I was particularly interested in your replies to MAX, as I was also wondering who, apart from the Intermediaries & Insolvency Svce know the “Guidelines” for The Spending Section?
– I’m guessing you might answer Try ringing National Debtline?
Also, for the Prescriptions and Medicine part do you know if Supplements (for Osteoarthritis) which are recommended by sites like Versus Arthritis and Arthritis. Org will be allowed? (Sorry, when I say “part”, I’m actually looking at my partly completed Step Change monthly budget) Also, things I have to buy like Gel Packs, Sprays, and Knee braces?
Also, I quit smoking, but then made the mistake of following the NHS Advice and started Vaping! Now I am spending more on Vapes than I ever was on Tobacco. It’s around £160 /month (!) – Any idea of a “Reasonable” amount that would be accepted please?
Finally what’s the situation with Lotteries – National, Health, and the Alzheimer’s Society Lottery? Can they be classed as “Hobbies”? If so any reasonable numbers come to mind – Erm, For the Spending I mean (Esp for someone who rarely gets out of the house due to pain etc?)
Thanks for your help and the site – glad I found it!
Sara (Debt Camel) says
are you getting disability benefits?
Jon says
Yes – PIP and ESA – Does that make a difference? I also suffer from Severe Treatment-resistant Depression and anxiety and BiPolar disorder.
Sara (Debt Camel) says
so the PIP you can spend on anything that helps you – supplements, gel packs, wherever. This amount just goes in as “adult care costs” in your budget and can exactly equal the PIP income.
If you want to talk through your budget in detail, post it in this MSE forum https://forums.moneysavingexpert.com/categories/iva-dro