How Long Does the Debt Relief Order Process Take?
If you are resident in England, Wales or Northern Ireland, one debt solution that you can consider is the Debt Relief Order (DRO). This is a fairly quick, but restrictive, scheme which freezes your debts, including their interest, fees and payments, for 12 months to give you breathing space to improve your financial situation. If you cannot improve your financial situation in that time, the debts are written off.
For some, the DRO process is relatively straightforward as an advisor works with you to process your application. But for many, discussing your finances is always stressful and it can be very helpful to know what to expect to help ease the procedure.
The Official Process
The official DRO process should take 10 working days so be prepared to wait for around 2 weeks to hear back about your application. During these 10 days your application is assessed by the Official Receiver. This is an authorised officer of the bankruptcy court who works for the Insolvency Service. There is a lot of preparation that you have to do before you hand in the application, however, and so the DSO often takes longer than 2 weeks to sort out.
You must work an approved insolvency adviser, which means you cannot apply for the DSO on your own. Together, you create an initial assessment of your situation, which collates all your debts, their details, your income, and your expenditure. You will also need to provide proof of all these details. This step can be made quicker if you collect as much documentation as you can in advance. This might include:
- Wage slips
- Lease Agreement
- Utility bills
- Car Valuation or Hire-Purchase Agreement
- Recent documentation showing your debt amounts
- Council tax documentation
- Evidence of any settle debts, in case they are disputed
- Evidence of your benefit entitlement
- Other financial documentation pertinent to your situation
Once you have prepared and your DRO is approved, it lasts for 12 months. This gives you 12 months without the unsecured debt payments so that you might be able to better budget with your surplus income and you don’t have to fall further into debt, or even aim to improve your financial situation, so that you become able to pay those debts. If your circumstances haven’t changed in those 12 months, the debt listed in your DRO is written off, allowing you a fresh start. It is important to note that your DRO is listed on your credit report for 6 years from its approval, which can impact your credit score.
The Steps To a DRO
To make things nice and easy to understand, here is a four step description of what you can expect if you think applying for a DRO is the best route for you.
- Contact an official DRO advisor
As you cannot apply for a DRO on your own, you must first discuss your situation with a qualified professional. They will assess your situation to see if you are likely to be eligible for the DRO. This is important because the DRO has some of the strictest criteria of any debt solution. You can only get a DRO if:
- You are resident of England, Wales or Northern Ireland
- Your debts are less than £20,000 in England and Wales, or £15,000 in Northern Ireland
- You do not own your home or have a mortgage
- Your car is worth less than £1000
- Your other assets are also worth less than £1000
- You cannot pay your minimum payments and have a disposable income of less than £50 per month
- You do not have any other insolvency agreement
If your adviser agrees that you are likely to meet those criteria, you can begin the next step together
This is where you might need documentation as your application is likely to require details about your income, expenditure and debts. Your adviser will help you to gather this information together and will turn it into an application.
Unfortunately, there is a £90 fee payable to the Insolvency Service. Although this can be paid in instalments, it must be paid in its entirety before the application is formally submitted. When the £90 has been paid, your adviser sends the application to the Official Receiver.
- Court approval
Your Official Receiver then has 10 working days to process your application. Don’t forget to take any bank holidays into account. If the Bankruptcy Court agrees that you are eligible, your DRO is approved and your debts a frozen. This means:
- You don’t have to make payments to the debts included in the DRO
- Their interest and fees are also frozen
- Your creditors can no longer contact you or take legal action against you.
If your circumstances remain the same and you cooperate fully with your Official Receiver, your DRO should remain in place for 12 months.
- End of DRO
After 12 months, your circumstances are reassessed and if there is no change, the DRO is viewed as proof that you cannot be expected to pay off your debts in a reasonable amount of time. Therefore, your debts are written off. Remember, only the unsecured debts that can be included in the DRO can be written off, and your DRO will remain on your credit report for 6 years.