Hi Diane, can you briefly explain what it is you and the Debt Relief Order team do here at PayPlan?

My role is the Competent Authority Liaison, which means I’m the link between PayPlan and the Insolvency Service. I’m also an Approved Intermediary. Our experienced Debt Advisors will speak to clients and assess whether a DRO is right for them. From that point, the client then needs an Approved Intermediary to put together the Debt Relief Order and submit it on their behalf. The Approved Intermediaries are the DRO team.

Once assessors have passed a client over to the team, what is the next step?

The DRO team will gather all the information from the client and retrieve their credit report for them if needs be. DROs follow very strict criteria. We’ll make sure we evidence everything and double check it all and ensure that the client meets the required criteria. We’ll then send the paperwork to the client so they can cross-check it and make sure they’re happy.  The Approved Intermediary will submit it to the Insolvency Service and the Debt Relief Order should be approved.

Roughly how long does this process take?

From the point of choosing a Debt Relief Order to actual submission, the process could take as little as four weeks. It could be longer depending on any aspects of the DRO that are outstanding. A lot of how long it takes depends on the pace of the individual.

What would you say are the main advantages of a DRO?

Before DROs were introduced, there were thousands of people who were insolvent, but struggled to use bankruptcy because it is more expensive. DROs have made debt relief available to many more people. The individual can be debt-free extremely quickly. A DRO is designed so that once approved, any of your debts are immediately suspended for 12 months, after which you can walk away and get a fresh start.

Another benefit of a DRO is that in the interim period – known as the moratorium period – creditors cannot pursue you for the debt. They are forbidden to do so by the Insolvency Service, giving you the peace of mind you need when dealing with debt.

Are there any disadvantages to a DRO?

Granted, creditors cannot chase you for payments. They can however still add interest and charges to the account during the moratorium. They have no right to demand this additional money unless the DRO is cancelled. In this case, the borrower would owe the original debt plus any interest and charges which have been added. What’s more, the terms of a DRO are very strict. For example, the rules mean that the DRO won’t always protect a person from the threat of eviction, and if you have a car worth over £2,000, this would make the person in question ineligible for a DRO.

Who is eligible for a DRO?

To be eligible for a DRO, your debt level has to be below £30,000. Your surplus (money left over once you’ve paid your household bills and any other expenses) has to be less than £75 a month. You can’t have any assets valued at over £2,000, and items on hire purchase (HP) such as a car will have to be included in the DRO unless a third party is willing to take over the HP agreement and make the payments. Basic essential items on HP, such as a sofa, a bed or a cooker, for example, may be allowed in the budget, but this will depend on payments being made and how much those payments are.

Will a DRO affect an individual’s credit rating?

A DRO will stay on your credit file for six years. Upon approval, you’ll be added to the IR (Insolvency Register), although upon completion of your DRO you will be removed.

More and more people are starting to enter DROs since its inception in 2009. Many people who use a DRO were trapped with debts and unable to access debt solutions before. The Insolvency Service has increased the debt limit from £15,000 to £30,000 and this has captured a lot more clients.

Although a DRO has very strict criteria, it’s aimed at those who don’t have a great deal. Those who have been out of work for some considerable time, maybe on long-term benefits. Usually, applicants don’t have much in the way of assets. They don’t own a property and are generally either renting or living with family.

How would someone apply for a DRO with PayPlan?

People can get in touch with us through a variety of different channels. Such as phone, text, our website or email. When someone contacts PayPlan they will be put through to our trained team of assessors. If the team then recommend a Debt Relief Order as the right solution for the client, and the client wants to proceed with one, PayPlan will send them a Debt Relief Order application pack. Once the individual has input all the information onto the form, the DRO team can start the process.

For free debt help and advice, get in touch today. You complete and submit a debt help form, or give us a call on 0800 316 1833 – we’re open from 8am-8pm Monday to Friday and 9am-3pm on Saturdays. Still unsure how to apply for a DRO? Visit Citizen’s Advice.