Debt Relief Order or IVA

Debt Relief Orders or DRO are the modern way of going insolvent. Designed to be a more simple, cost-effective way than declaring bankruptcy, they are mainly for people with minimal to no assets and absolutely no way of getting out of their financial woes. 

How do I apply for a Debt Relief Order?

Applying for a debt relief order really is a last resort just like declaring bankruptcy. You will be personally listed on a public register and the application can only be done by an approved intermediary. Usually, these are debt advice organisations and will not charge for making the application. 

Whilst a DRO does offer protection from enforcement of creditors who are part of the application; there are many conditions that must be adhered to by the applicant or they risk having the DRO revoked and will be open to action being taken against them by creditors.

A DRO is also only a 12month solution and requires you to have your debts cleared up by the end of this period. If your financial situation starts to improve during this time, you will be expected to make arrangements to pay back debts faster. 

You can only have a Debt Relief Order once in every 6 years

If you do happen to slip up and not comply with the many conditions that are placed on a debt relief order, you will be unable to apply for another one for 6 years so if you choose this option, you better be on your best behaviour and ensure you abide by every instruction given to you by the Official receiver.

The last resort solution

A debt relief order could be a viable option if you are a low-income earner with no assets and have literally no other options left, but this should be an absolute last resort. 

Could an IVA be more suitable?

Now in stark contrast. An IVA can give you all the benefits of protection that a DRO offers but with far less complexity in the conditions imposed on you. 

What you gain from having an IVA is simple peace of mind. One payment to one creditor that takes care of all your debts for you and will negotiate the best deal. 

You have a clear plan (usually over 5years) to rebuild your financial foundation and the sense of pride that achieving this will set you up for financial success in the future. 

Before applying for a DRO you should at the very least consider and speak to an expert about an IVA as an option because it is a far better option that allows you more freedom to get yourself back on your feet and working toward a better future without the hassle of creditors chasing you or threatening you if you step outside the many rules of a DRO. 

This page on the Government website gives more information on DRO’s.

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