A Debt Relief Order (DRO) is often the best debt solution if you have under £20,000 of debt, 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.
You can’t apply for a DRO yourself, the application has to go through a debt adviser who is an Approved DRO Intermediary. In this article, I just call them your DRO Adviser as it’s shorter!
Most DROs are set up by Citizens Advice, but National Debtline, StepChange and Christians Against Poverty also handle a lot. It doesn’t matter who you go through, the DRO you end up with will be the same.
Because you aren’t applying directly, the process may seem a bit confusing. The best answer to every question is ask your DRO Adviser – each firm has their own internal forms and methods. They really want you to get through this process as quickly and easily as possible and the more you understand what is happening, the simpler that is going to be.
But if you are feeling anxious, or you can’t get to talk to your DRO Adviser for a few days, here are the common questions I hear about DRO applications.
Contents
Questions about eligibility and suitability
I have covered the DRO criteria here – they 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.
Can a DRO be refused?
Yes but it’s very rare!
In 2019 the Insolvency Service approved 27,497 DROs and rejected just 78. So less than a half a percent of applications are refused.
If you think your adviser is being fussy and doing a lot of checks, that is because they are making sure there won’t be any problems so your DRO application will sail through. Most DRO advisers have never had an application rejected at all.
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 £50 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 £50 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 won’t matter, you will definitely qualify for a DRO. 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. Backdates amounts for ESA though can be a problem – talk to your DRO adviser about these.
Does it matter if I went bankrupt 4 years ago?
No that won’t matter. The DRO Unit of the Insolvency Service will only refuse your application 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 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 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.
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 only being asked about their income so that it can be checked that your rent and bills are being fairly divided between you. If you earn the same, a 50/50 split would be normal.
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.
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 parent £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 a claim for PPI or a payday loan refund – should I delay until this is sorted?
It may be best to get on with the DRO now, but read “If I get a PPI 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 and stop paying any of them – 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.
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, but it is possible 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 a problem?
You have to talk to your DRO adviser about this as it can get complicated. Briefly:
- any arrears on the HP have to be listed as a debt in your DRO;
- if you don’t have arrears, the HP doesn’t have to be listed and then it doesn’t count towards your the £20,000 limit;
- the car finance company may sometimes choose to end the agreement and repossess the car even if it is not listed. (This also happens in bankruptcy and IVAs.)
- your DRO has to decide if your future payments to the HP will be an “allowable expense”.
Of course if you don’t want to keep the car, you can hand back the keys and then list the debt in your DRO so it is wiped out.
I am repaying a Universal Credit advance – can this be included?
Yes, it can. 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.
Questions about how long the application takes
When my local CAB has checked my DRO do I then apply to the Insolvency Service?
No. Only approved intermediaries – your DRO Adviser – can submit an application for a DRO. Your DRO Adviser gets the information to go on the application from you and your credit records and you have to sign to authorise them to send in your application.
I’m about to pay the £90, has my application already gone in?
No. You will have been sent the letter with a barcode on it to pay the fee. The fee goes to the Insolvency Service. You then need to tell your DRO Adviser you have paid this and at that point they submit 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.
The letter to you confirming this, called the Debtor’s Notice, is posted the same day your DRO Adviser is told, so you usually get it the day after. It’s a good idea to 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 pay the £90 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’ve paid my £90 DRO fee two days ago 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. Your bank isn’t told you have started a DRO. Anecdotally NatWest and Halifax sometimes make you downgrade to a basic bank account from a standard current account.
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 landlord is only told if you have rent arrears. Unless you have an attachment of earning in place (which will stop) you employer isn’t contacted. 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.
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. If this sounds unlikely, think about what the fees are – your £90 isn’t going to pay for any staff to be looking at your bank statements each month!
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 people’s 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 better to have this discussion before an application goes in!
Can I leave a debt out of a DRO?
Do debt collectors still phone after a DRO?
DROs and your credit rating
Michele Rimmer says
My friend has been advised by Step Change to apply for a DRO. Can she do so if she has been selling items of her own on ebay in order to make ends meet? she hasnt mentioned this to SC and is worried it might preclude her from applying.
Sara (Debt Camel) says
I am not sure what this would be a problem. Is she just trying to keep up with the debts at the moment? She needs to talk to SC and say what is happening and why she is worried – it may not be a problem at all!
Mohammed says
Hi Sara
I am currently self employed and due to this pandemic I have had no income and cant see my situation getting better for the next 12 – 18 months.
I have around 13k debt, credit cards and overdraft in total and have never missed any payments.
I have a couple of questions, if i do go forward with a potential DRO, would the one off self employment grant be included and do benefits such as Child benefit, child tax credit and working tax credit which my partner receives in her account need to be included.
Sara (Debt Camel) says
if i do go forward with a potential DRO, would the one off self employment grant be included
If this is money you have already received and it is sitting in your bank account, then that money is an “asset” that will be taken into consideration – basically you can’t have more than £1000 in your bank account.
But applying for a DRO takes time, typically about 10 weeks at the moment. And the SEISS grants only cover about 70% of 3 months of self employed income. So you may have that money now but you will be spending it over the next couple of months while your DRO application goes through.
You will need to talk to the adviser setting up your DRO about your likely level of income over the next year. As you are self emplyed, the best place to get advice is Business Debtline, phone 0800 197 6026 9am – 8pm Monday to Friday.
and do benefits such as Child benefit, child tax credit and working tax credit which my partner receives in her account need to be included.
Yes, tax credits are a joint claim between you and your partner. Also are you getting housing benefit?
But if you have no other income apart from benefits, you will qualify for a DRO.
Stuart says
Hi i am looking at a DRO for my father and was wondering how would it affect the chances of getting one if he payed off his over draft so he can keep his bank account he isnt into his overdraft so would just be a case of cancelling the overdraft with the bank.
Sara (Debt Camel) says
If he pays off his overdraft it may be treated as having given “preference” to the bank and not been fair to his other creditors.
Also even if he does clear the overdraft the bank may still close the account if he goes for a DRO.
He would be better advised to plan on getting a new basic bank account, see https://debtcamel.co.uk/bank-accounts-after-bankruptcy/
Stuart monkman says
Even if he isn’t using the overdraft facility?
Sara (Debt Camel) says
Yes. Some banks will close a standard bank account on Insolvency.
Stuart monkman says
Thanks for your quick response Sara :)
What would be your advice on money he has in the bank from a backdated PIP Award Jan-June just over 2K.
Also would you set up the new bank before or after DRO application?
Sara (Debt Camel) says
so this money is in a different bank account?
Stuart says
Hi, my wife only gets carers allowance for me do I include this in mine or her income?
Sara (Debt Camel) says
That is her income.
Beverley Roberts says
My partner and I are applying for social housing. I am going through a DRO process,do I have to tell the new social housing? What impact will it have
Sara (Debt Camel) says
You have to answer any questions honestly. You aren’t being offered credit (I assume) so you don’t have a legal obligation to tell them about your DRO unless you are asked. If the Housing Association credit checks you the DRO will show up.
I haven’t heard of people having a problem in this situation but it will depend on your HA.
Ripa says
Hello
I have just been granted a DRO last week and had a couple of questions. I have tried to ask the DRO Adviser but they did not seem to be any clearer and thought maybe someone here may have some experience.
I currently have a Credit Union loan secured to my savings and repayments were being made via a salary deduction. Some of the deduction goes towards the loan and a small portion towards savings. I realise that my savings will be offset against the loan, which I’m okay with, but wanted to know what happens with the salary deductions. Do these automatically stop? I contacted the Credit Union and they won’t agree to stopping them and have said they need to refer this up to someone senior.
I also have some rent arrears (council tenant), which I have tried to reduce for the past 6 months and the arrears have not increased. Even after the DRO ends will these arrears be written off by the Council? Again I haven’t really had a straight answer from the rent department and all they have said is that I need to continue to pay the arrears.
Sara (Debt Camel) says
Yes the CU should stop the deductions.
But you have to keep on paying the rent arrears or you can be evicted.
Ripa says
Thanks for the reply.
They CU are due to receive a payment this week. If any salary deductions are made are they applied to the loan or refunded?
Yes I’ve agreed with the council to continue paying £5 per week and they will not look to start eviction proceedings. Once the DRO is finished will the remainder of the rent arrears be written off?
Sara (Debt Camel) says
if there is a deduction from your salary, I suggest you send the CU a complaint and ask for the money to be refunded to you.
You will need to keep paying the rent arrears after the DRO is finished.
Ripa says
Hi Sara
July’s salary deduction was taken, so I contacted the CU, they asked me to fill out a new salary deduction to Nil, which I have done and used my savings to reduce the loan balance. However, they are refusing to refund July’s payment saying that it was my responsibility to stop the salary deduction.
I’ve pointed out to them that the DRO wasn’t even granted until 17/07/2020 and the salary deduction was the 26/07/2020. So even if I let them know it would have been too late to make changes.
The CU have said they will only refund if the DRO adviser can give them case law showing that a creditor has to refund payments after a DRO was granted. I’ve contacted StepChange, but have not received a response yet, what do you suggest?
Should I make a formal complaint?
Sara (Debt Camel) says
I think a formal complaint is a good idea, but I suggest you wait for a response from StepChange.
Tori says
Hi Sara
I have been laid off from my job due to decline in physical health (not worked since march). I am currently surviving on UC, I am hoping to be able to pick up a few hours work to top it up, but this wont be for another couple of months. I have £17000 debt on credit cards. I have done a provisional budget which comes to £690 per month (excluding rent). my current income from UC (excluding rent) is £315 per month. If I go ahead with a DRO now, will I be able to top up my income in a couple of months when i am able to, so that it matches my budget, or should I wait until I have the earnings coming in before I apply for the DRO?
Many thanks for your help!
Sara (Debt Camel) says
Your DRO adviser will go through the details with you. It’s not unusual for someone to have a “deficit budget” when applying for a DRO and that isn’t in my opinion a reason to delay a DRO application.
But obviously if your deficit is huge, then that is your main priority and it may be sensible for the DRO to wait.
If you do have a deficit budget and start to earn a bit, then your surplus income may still be under the allowed amount and your DRO should be unaffected. Again your DRO advised should explain this in detail.
If you are just doing research at the moment, I suggest you kick off the process asap by talking to National Debtline on 0808 808 4000.
Kirsty says
Hi there I am 4 months into my DRO and have had a small increase in my income however I am spending the money for things I need. I have contacted the DRO unit via email and asked if I need to do a new expenditure for but I had a response stating no as I have still have less than £50 a month. They didn’t ask for my name or anything. Will I be okay? My UC has risen due to covid I understand I do not not need to inform them is this definitely the case?
Many thanks
Sara (Debt Camel) says
If you gave them a reasonable description in your email and they said they didn’t need the detaiils, that is fine. keep your email and their reply in case it is ever queried, but that is unlikely.
They don’t need to be told that your UC has gone up because of covid.
Michael66 says
Good morning,
yesterday I had my debt relief order granted and it is due to run until 18th August 2021, I haven’t had an email from the insolvency service but I checked the insolvency register and it’s listed as granted.
My question is this, will the loans/debt that are included in the dro be marked as settled/discharged/closed from the 18th of August 2021 on the anniversary of it being granted as the 12 month period will be up on that date?
Are there any checks or final assessments conducted?
And finally how long after a DRO being granted will you usually see it reported on your credit report/score mine hasn’t been updated as of yet!
Sara (Debt Camel) says
See https://debtcamel.co.uk/end-dro/ for what happens at the end of your DRO year.
And finally how long after a DRO being granted will you usually see it reported on your credit report/score mine hasn’t been updated as of yet!
A few weeks I guess, but does it matter? You can now relax.
Michael66 says
Hi Sara,
Thank you for your reply!
Ignore the part about not having heard anything! It was granted overnight and I can now see it on the insolvency register- I’ve printed out a paper copy and saved a digital copy for my own records for when it disappears off the register in the future just incase I get any come backs from any of the people I previously held debt with.
I’ve also just done a ring round of all the creditors to make them aware that this has now been approved and I’ve emailed relevant collection departments within these organisations with a copy of the DRO paperwork and the print out from the insolvency register to show it has been granted.
Hopefully now they will start their internal processes for closing the accounts or at least cease all contact!
Sara (Debt Camel) says
ok but for anyone else reading this, I will say that there is no need to do anything. You could sit back and relax and just respond to any creditors that still contact you. There is no need to ring round which a lot of people might find very stressful.
Kerry says
Hi, I have just started a dro. My mobile phone contract finishes next month, am I able to upgrade? It wasn’t included in debts and phone I have is dying on me.
Thank you
Sara (Debt Camel) says
Well you can try if the amount you would be borrowing is less than £500, but it’s possible the mobile co will say No. If this is rejected, you can look for a cheap phone, possibly second hand, or from a friend who has upgraded, and get a cheap Sim only contract for it.
Steve says
If I apply for a dro will my wife’s car be taken into account
Sara (Debt Camel) says
Simple answer – no.
More complex – did you buy it for her? Are you paying the running costs?
Dan says
Hi, I have already been granted a DRO, and I have a credit card that doesn’t have any debt on it, had it since before the dro, am i still allowed to spend on this?
Sara (Debt Camel) says
You are allowed to take out credit op to £500. But this is a pretty bad idea. Can you not manage without this?
tabsum says
Hi im thinking of taking out a dro but I have a car on finance I am paying monthly and I don’t want to lose it as I need it for work what can I do
Sara (Debt Camel) says
I suggest you talk to a debt adviser about a possible DRO and what your other debt options might be. Phone National Debtline on 0808 808 4000.
Mike21 says
At what point after the dro being approved should creditors stop adding defaults to your credit file? I know the DRO will be on mine for the next 6 years from the date it was issued but I’m concerned that if they keep adding defaults every month for the year I’m in my debt relief order that they won’t then drop off my report till up to a year after the order itself drops off
Thanks in advance
Sara (Debt Camel) says
Defaults should be added during the DRO year. But a defaulted debt drops off your credit record 6 years after the first default date – the later default markers don’t matter.
See https://debtcamel.co.uk/repair-credit-record-dro/ which looks at this in more detail.
JJ16 says
Does child maintenance need to be included when your doing expenditure? I’ve got a claim with child maintenance but still waiting on receiving anything.
Sara (Debt Camel) says
This is a difficult situation – do you expect that this will start to be paid? You need to talk about this with your DRO adviser.
Victoria says
I have spoken to National Debtline regarding getting a debt relief order, and have the budget form ready to complete. I have not worked since march, I was previously on tax credits, now I am getting universal credit. Since I spoke to debtline a week ago, Tax credits have sent me a lump sum back dated of £2000, I have spent around £900 on furniture and essentials as I had nothing before and have just moved into a unfurnished studio flat. I would like to put the rest towards paying off my credit cards and overdraft before I make the DRO application (I owe £17500), but I am aware of the rule about not giving preference to any lender. I have both an overdraft and credit card with one bank, two credit cards with another bank, two credit cards with a third bank, then a further one with a fourth bank. My question is – how do I divide the money between the debts whilst sticking to the ‘not giving preference’ rule? Do I divide it between the four banks equally, or between the seven different accounts (including overdraft) equally? Thank you for your help!
Sara (Debt Camel) says
Hi Victoria,
First I have corrected the name of the firm you are talking to National Debtline – I assume that is right and you just made a typo?
This was a good time to get this lump sum for you. I am not saying £900 is too much to have spent, but National Debtlinemay ask what the money was spent on so it may help if you have a list.
You don’t have to distribute all of the rest of the money before getting a DRO – you are allowed some money in the bank. And in particular you should make sure you are up to date will all your bills at the point you apply – council tax (I hope you are getting council tax support? But you may still have some to pay), rent, utilities, mobile, TV license etc
And of course there is the £90 DRO fee.
So I think you need to talk to National Debtline about this and about the money you will have left. If they think that is too much for you to start a DRO with, then they will explain how to distribute the money – normally this is done “pro rata” so accounts with a higher balance get more.
Victoria says
That’s great, thank you Sara!
Emy says
Hi,
Does having a payment holiday affect your chances of a DRO being approved?
Sara (Debt Camel) says
That’s quite a vague questionM I’m not sure what you are worried about? Could you describe a bit more about your specific situation?
Emy says
Hi,
Im thinking of applying for a DRO but have took a payment holiday for 3 of my creditors and for 2 of my creditors im making minimum payment to.
After the payments holiday ends I won’t be able to pay the minimum payment to my creditors, do payment holidays affect a DRO being approved?
Sara (Debt Camel) says
I haven’t heard that this is a problem. I suggest you talk to National Debtline on 0808 808 4000 who can check you meet the other DRO criteria.
If it is a problem because you haven’t been treating all your creditors the same, then National Debtline can talk about paying them all the same for a while and then going for a DRO.
Emy says
Hi Sarah, I spoke to National Debtline yesterday and they said because my husband is self-employed that business debt line will deal with me and transfered my call to them. They didnt pick up as they were really busy.
My debts are not joint, I dont work. Should I speak to CAB?
Sara (Debt Camel) says
Yes you can go to CAB, but the suggestion to talk to Business Debtline is sensible if your partner also has debt problems.
Hannah says
Hi Emy
I was in exactly the same position in terms of taking advantage of payment holidays during lockdown and it wasnt an issue during the DRO application process.
Emy says
Thank you for your help!
Hannah says
Welcome. Hope all goes smoothly.
Lee says
I have a car that is provided to me on a NHS salary sacrifice scheme. This is my only means of transport and the scheme includes insurance, tyres, maintenance and MOT. The car will never be owned by me and so won’t be an “asset” at the end of the contract, and the car is handed back to the leasing company once the contract comes to an end. To hand the car back now would incur an early termination fee of circa £3000 which obviously I can’t afford to pay. The monthly fee for the car is deducted directly from my wages by my employer. Can I still apply for a DRO with this in mind?
Sara (Debt Camel) says
It won’t be a problem as an “asset” because you don’t own it.
Your DRO adviser will consider if the car is an essential expanse for you – from what you have said it probably is.
So I suggest you talk to a DRO adviser about this and the rest of your situation – good luck!
Mark says
when does dro drop of file is it 6 years from start of dro,or 6 years from disharge of dro which was 1 year later
Sara (Debt Camel) says
6 years from the start.
MS says
I have a DRO in place (March 2020). My current phone is having all sorts of issues and I need to get a new one. Is it possible to get a phone on contract? Or is this not allowed until the 12 months is over?
Sara (Debt Camel) says
You wouldn’t be breaking the DRO rules if the amount you are borrowing is less than £500. But you may find you are rejected for the finance.
One option us to look for a cheap phone eg https://www.techradar.com/uk/best/best-cheap-phones or a second hand one and get a SIM only deal.
Tom says
I’m thinking of applying for DRO, however, a part of me is scared it can be rejected. If it’s rejected, would I damage my credit rating for the next 6years with the DRO entry?
Sara (Debt Camel) says
Less than 1 in 300 DRO applications is rejected.
In the very unlikely event this happens to you, a DRO does not show on your credit record.
Anon says
Hi there,
I am currently renting with my boyfriend and we split the bills 50/50. I am a full time mature student and I am starting to struggle to pay my credit card off and I’m only able to work one day every other week due to the workload from university. I am thinking about applying for a DRO and was wondering if my boyfriend will be notified of my debt and the DRO application as I am ashamed of it and I’m worried about him finding out. Thanks.
Sara (Debt Camel) says
Your boyfriend won’t be told.
But it is a pretty bad idea to try to conceal something like this from your partner. If say you two wanted to move and get a tenancy together, a DRO could affect a credit check. He may be more understanding than you expect – it’s hard for student’s to pick up much casual work at the moment.
When will your uni course finish? Depending on how large this debt is, it may be a better idea to make a token £1 a month payment to it now until uni finishes. Of copurse if you have a lot of debt and no prospect of really paying it off, a DRO may still be a good idea.
Tzvetelina says
Hello…I will be applying for DRO soon as currently lost my job due to covid and claiming UC.My car is high purchase and I pay every month.The car is not on my name.Can I still apply for DRO?
Sara (Debt Camel) says
The car is not on my name
I assume the HP car finance is in your name.
See the I have a car on HP – is this a problem? in the article above.
BUT how will you be able to pay the HP if you are on UC? Are you expecting to be back in work soon?
Jeffrey says
Hi
I am considering applying for a DRO but I had a couple of gambling payments paid for through my bank account (nothing drastic) but will this affect my application? Will I have to account for money that is spent through my bank account or payments showing in my bank statements.
Hope this doesn’t sound confusing.
Thank you for the help
Sara (Debt Camel) says
Having gambling showing on your bank statements won’t stop you being accepted for a DRO.
A major gambling problem that significantly contributed to your debts could potentially lead to you getting a Debt Relief Restrictions Order. In a DRRO your debts are still cleared at the end of the DRO year but the DRO restrictions (eg you can’t borrow more than £500 without telling the creditor you have a DRO) will last for more than the year. See https://www.gov.uk/government/publications/debt-relief-restrictions-orders-and-undertakings/debt-relief-restrictions-orders-and-undertakings#drro-and-drru-restrictions – to be honest these make very little difference to most people and so are not something to worry about.
DRROs are rare and you wouldn’t get one unless gambling had been significant factor. “A couple of gambling payments” makes it sound as though your gambling wasn’t a major problem.
The adviser that sets up a DRO can talk to you about the details of your situation. Don’t let worries about this stop you from getting detailed advice on a DRO!
Jeffrey says
Sounds good.
Thank you Sara for your time in replying.
Mark says
Hi, I’ve had a IVA fot a year, but my Income has dropped and I could no longer afford the payment’s as my income and expenditure is now at – £90 per month less than I have coming in. My IVA. Company have advised me to terminate my IVA and going forward recomended that I should apply for a debt relief order as they don’t offer them. Is this something I can do.
Regards Mark
Sara (Debt Camel) says
It is possible. See https://debtcamel.co.uk/end-iva-change-to-dro/.
Mark says
Hi Sara, thank you for that, but if I’m paying out more than I have coming in can I still apply for a DRO. I have debts around 10,000 and we just manage to get by since we stopped paying the IVAb. We have no rent or council tax arrears and we are on pre pay meters for gas and electric with no debts on them either. We do however have a car on hire purchase with 2 years left on it which I use to travel to and from work as Its 20 miles away and again I’m up to date with the payments of £98 a month with a little bit of help from my mother in law from time to time.
Mark
Sara (Debt Camel) says
if I’m paying out more than I have coming in can I still apply for a DRO
you can have a DRO with “negative disposable income”.
Talk to a debt adviser – phone National Debtline on 0808 808 4000. they will work through whether you are eligible and what your options are.
But if you cant afford the IVA, with 4 years to go continuing with it is very unlikely to be a possible option.
Mark says
Hi Sara, Thank you for your advice, I’ll give them a call.
Regards Mark
Mark says
Hi, Sara, I’ve just received a email from my IVA company to sign electronically to cancel the IVA. How much time will I have to set up another debt solution, hopefully a DRO before they my creditors take action.
Regards Mark
Sara (Debt Camel) says
That depends a bit on your creditors. Some people find that they are literally never contacted… but obviously you can’t rely on that happening.
Read https://debtcamel.co.uk/when-iva-fails/.
Bottom line – no need to rush into this it’s fine to take a few months. But the worst thing is to do nothing now, have your finances improve a bit and then find in 4 or 5 years all your creditors pop out of the woodwork.
Mark says
Hi Sara, Thank you for all your advice and being so helpful.
Regards Mark
Mark says
Hi Sara, I’ve noticed omy IVA annual statement that one of my creditors has sold the debt to PRA Group will they persu me straight away now my IVA has been cancel.
Regards Mark
Sara (Debt Camel) says
I would be surprised if you get more than one letter in the next couple of months. Really, there is no need to panic about this, just take advice on a DRO.
Mark says
Hi Sara, Thank you for that, ill get started wright away.
Regards Mark