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Which Debts are Included in a DRO?

This debt solution is only accessible for residents of England, Wales, and Northern Ireland.

A Debt Relief Order is a debt solution that basically suspends unsecured debts for up to 12 months. After such a period your debts could be written off considering that there’s no improvement with your circumstances. Furthermore, the rules on which debts can be included are not all.

Debts included in a debt relief order or DRO are known as qualifying debts. These are debts that do not exceed £20,000 in worth if you’re a resident of England, Wales, or Northern Ireland.

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Urgent Updates For Residents in Northern Ireland

The Insolvency Service of Northern Ireland is closing as of March 24, 2020, until further notice, due to the COVID-19 pandemic.

In this regard, it would not be possible for the residents of Northern Ireland to proceed with a DRO (debt relief order) application. We can cater advice regarding your DRO, but the application process will proceed until the service resumes.

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Debts Included in a DRO

All of your debts have to be listen to when you apply for a DRO or debt relief order. If you missed to include a debt once your DRO commenced, you will have to pay it yourself, and it might cancel your DRO if the debt not included will surpass the allowed limit when incorporated. 

Below are the types of debt that will be written off after the moratorium period (12 months). This can happen if you have not improved your circumstances. The 12 months moratorium period allows you not to make any payments on these types of debts.

  • Utility Arrears, Other household bills such as your phone contract, electric, and council tax
  • Debts to family and friends
  • Consumer debts like payday loans, overdrafts, catalogues debts, credit card or store cards
  • Benefit overpayments, except if due to fraud
  •  Conditional sale agreements or HPA
  • Goods purchased on finance, such as anything purchased on a buy-now-pay-later agreement

Debts Not Included in a DRO

Debt relief order will not include all your debts. The excluded debts have to be paid as usual and are also excluded in taking the allowed limit into account.

Moreover, debt that is considered as fraud will be dealt with differently. Such debts will be taken into account when calculating the allowed limit, but it won’t be written off at the end of the moratorium period.

HPAs and DROs

You do not legally own goods that are still under HPA. You have to pay these items or goods in full before you can obtain ownership. If your DRO is approved, your lender or HP provider will let you surrender the good. They can also demand to transfer the ownership to someone who can pay the agreement. However, you still can keep the goods when you meet the following criteria:

  • The goods are essential to you
  • The goods are below the value of DRO limits which are £1000 for England, Wales, or Northern Ireland residents.
  • If your payment is on time and you do not have any arrears

Are debts from friends and family included in a DRO?

Just like your other debt, money borrowed from your family or friends must be listed on your DRO. For small debts, you can try to arrange payments by doing odd jobs for them to pay the debt off in kind.

It is also important that you shouldn’t pay your loans to family and friends before a DRO. If this happens, it could be a ground for preferential treatment. This, in turn, can result rejecting DRO.

Free Debt Help

One of the steps to manage your debt is by fitting strategies in bargaining with creditors. You can relieve yourself from indebtedness by reducing your monthly payments and interests. So, before you decide, try our free online debt advice tool or call us right away. We can help you determine whether a DRO suits you best.