You cannot apply for a Debt Relief Order (DRO) yourself. It is a formal legally binding agreement with your creditors. As such you need to use an authorised Debt Counsellor called an Approved Intermediary to help you. Once you have chosen an Intermediary to work with there are a number of steps you will need to go through. These are described in detail below.
Step 1. Find an Approved Debt Relief Order Intermediary
In order to apply for a Debt Relief Order you will need to work with an authorised debt counsellor known as an Approved Intermediary. There are a number of organisations who have approved DRO intermediaries. Generally speaking it is best to work with a Charity who will not charge you for their services.
BMD Tip: Beat My Debt (and its owner Wilmott Turner Financial Services) is not an Approved DRO Intermediary. We can advise you as to whether a DRO is the right debt solution for you. However if you want to go ahead with your application you should contact one of the charities listed above.
Step 2. Review your Financial Circumstances
The Approved Intermediary must review your financial circumstances. Before they will allow you to apply for a DRO they will need to discuss the following information with you to ensure you meet the acceptance criteria.
BMD Tip: You are likely to ask you to provide evidence of your income with wages slips or benefits statements. You will be asked to prove the amount of debt you owe with recent creditor statements and a copy of your Credit File.
In order to be eligible for a DRO your unsecured debts must total no more than £20,000. This amount was increased from £15,000 on the 1st October 2015.
Your income and living expenses
Your disposable income must be no more than £50 a month. You should calculate your disposable income yourself before speaking to an Authorised Intermediary so that you know your disposable income is less than £50.
Your assets must not be worth more than £1000 (excluding the value of your car). You will be allowed to keep all of your reasonable household items, your car (as long as it is worth less than £1000) and your pension.
Step 3: Complete your DRO Application Form
Once the Approved intermediary is happy you meet the criteria for a Debt Relief Order they will then complete the application form on your behalf. This document will be posted to you for your review. If there are any errors you must ask your intermediary to change these.
Step 4. Pay your Application Fee
Before your application can be submitted you will need to pay a £90 application fee. You will be asked to pay this at the Post Office. Once you confirm that the payment has been made your Intermediary will submit your application to the Official Receiver (OR) on your behalf.
Step 5. Your DRO is authorised
Once it is submitted the Official Receiver will review your DRO application. If they are satisfied that you meet the criteria for a DRO they will authorise the Order. In other words it will become legally binding on your creditors.
Once this is done the OR will write to you confirming your DRO is in place. You can then stop paying all of your creditors. The official receiver will inform all of them on your behalf. From this point they are no longer allowed to chase you for the repayment of your debt or add further interest or charges to the outstanding balances.
BMD Tip: You name and personal details will then be recorded in the Insolvency Register.
Step 6. Discharged from your DRO after 12 Months
The Debt Relief Order will last for 1 year. During this time if there are any changes to your financial circumstances you must inform the Official Receiver immediately. This is particularly the case if your income increases or you receive a windfall.
As long as non of your circumstances have changed for the better then after 12 months from the date your DRO was authorised you will be discharged. All the debt you owed will written off leaving and you will be debt free.
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