There are many reasons why a DRO can be stopped, or which may lead to a DRO being objected to by a creditor. These include, but are not limited to:. Your financial circumstances have changed. You now own property over £2,000. You have come into possession of additional money or valuables which you now own, such as money left to you in a will. You left out key information about your debts, assets or income in your DRO application. Some people believe that, if you break one of the restrictions, your DRO will be cancelled. However, this is not always the case and your DRO as it is considered an offence. You may also be asked to begin making payments towards debts which were covered by the DRO, or your creditors can start to take action against you to recover what they are owed.

IVA vs DRO - Which Is Better?

When looking for a debt solution, it can be difficult to find the right one for you. IVAs and debt relief orders are commonly mentioned, but there are some slight differences between the two. IVAs are a better option for those people who might not meet the criteria for a DRO, for example, where a car is worth too much, their DI is too high or they are a homeowner. IVAs involve monthly payments being made over the space of 5 to 6 years, whereas DROs require a one-off payment of £90. DROs are more suited to those who don’t have any assets and are unable to pay their debts. This individual will also have unsecured debts of under £30,000. A positive to a DRO is that it only lasts a year. However, it will still be mentioned on your credit file for six years.

Will DRO Affect Your Credit Score?

Yes, you should expect that your debt relief order will affect your credit score. Whether you have had one in the past or are looking to get one, it can affect your credit score. Additionally, this could make it more difficult to get credit in the future, as it stays on your file for 6 years. If your bank is listed as a creditor, your DRO adviser will contact your bank to let them know you have a debt relief order. In some cases, banks will check your bank account to see if you have been given a DRO. If the bank is included in your DRO application, the bank will then decide whether to freeze your bank account or, create a new account with them.

Will A DRO Check Your Bank Account?

No, your bank account is not monitored during or after the DRO year. All checks of your account will be completed during the DRO application process. This includes your income, your debts and what you own. It is important during the process of your DRO application that you are transparent with the advisor. Withholding or hiding information from your DRO advisor could cause further problems with your application later on if you claim debt relief you may not have been entitled to, such as your DRO being stopped, or lead to a Debt Relief Restrictions Order (DRRO).

Debt Management Plans & Advice

What is a DMP?

A Debt Management Plan (DMP) is an informal debt solution that can be used to help you pay back what you owe at an affordable rate. A DMP will allow you to reduce monthly payments towards your debts to one affordable amount. This is done by negotiating reduced rates with your creditors based on your disposable income after completing a full breakdown of your current personal circumstances.

Key Facts Of A DMP

Unsecured debts like personal loans, overdrafts and credit cards can be included in a DMP
Priority debts, mortgages and so on are not typically included in a DMP and you should continue paying these as you would normally
Debts are repaid in one set monthly payment, divided between your creditors
Typically, a DMP is managed by a DMP provider who will deal with your creditors on your behalf

Is a DMP right for me?

If you’re struggling to keep up with loans and credit cards, a DMP may be able to help. They can also be beneficial if you prefer someone else to deal with your creditors on your behalf.

If you’d prefer to make one set payment each month to help you budget more effectively, a DMP may also help you do this.

Monthly budget

Get in touch with a debt advisory service to devise a monthly budget to see if you can afford to make debt repayments.

Unsecured debts

All unsecured debt - like personal loans, overdrafts and credit cards - can be included in a DMP. Priority bills like your mortgage aren’t usually included.

Single payment

All your debts are consolidated so you only have to make one single payment each month, making it easier for you to manage your finances.

Extended payback

Remember that it may take longer to repay your debts because you’ll be paying less each month.

Monthly budget

Get in touch with a debt advisory service to devise a monthly budget to see if you can afford to make debt repayments.

Unsecured debts

All unsecured debt - like personal loans, overdrafts and credit cards - can be included in a DMP. Priority bills like your mortgage aren’t usually included.

Single payment

All your debts are consolidated so you only have to make one single payment each month, making it easier for you to manage your finances.

Extended payback

Remember that it may take longer to repay your debts because you’ll be paying less each month.

What happens next?

If we find that you are eligible for a debt relief order, we will be able to refer you to our partner for your application to be processed. For residents of Northern Ireland there is a fee of £90 which must be paid before the application is submitted; for residents of England & Wales, there is no fee to pay. If we find that a DRO is not suitable for you, then we will look into other debt solutions that suit your current circumstances.

Eligible Debts

A DMP may work for…

A Debt Management Plan is a potential option for paying back non-priority debts like loans, credit cards, store cards and so on, with debts repaid in one single monthly payment.

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Loans

Credit Cards

Store Cards

Payday Loan Debt

Previous Energy Bills

Overdrafts

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Ineligible Debts

A DMP may not work for…

Debt Management Plans are unsuitable as an option for priority debts, such as…

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Mortgages

Current energy bills

Rent

Current court fines being recovered by a bailiff

Current council tax arrears

Income tax

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The positives of using a DMP?

If you are considering a debt management program, you can expect a number of benefits, both in terms of paying off your debt and relieving the mental strain debt can bring.

Reduces stress - One of the benefits of a DMP is that it helps reduce stress thanks to more manageable payments.

Keeps you protected - another benefit of a debt management program is that your creditors are less likely to pursue legal action against you, if they have agreed to your DMP.

Get back on track - You are able to get back on track, understand how much needs to be paid and when it needs to be paid by.

Informal arrangement based on your affordability.

A debt management plan is a highly effective way to understand your debt and come up with a solution for more manageable repayments, as well as taking some of the financial pressure off whilst you are repaying your debt.

The negatives of using a DMP?

Despite how effective a debt management program is, it is important that you understand some of the negatives of them.

Credit Card Accounts Must Be Closed - When you are setting up your DMP, one of the first things you must do is close your credit card accounts. However, in some cases, you can have an emergency credit card to help you pay for anything urgent, depending on the agreement of the DMP. Although it is seen as a negative to close credit cards, it is important to understand this will benefit you in the long run, to prevent you from taking on more debt and financial burden. If you haven’t included one of your credit cards in your debt management plan, it is strongly advised not to use it unless it is for an emergency.

You have to make consistent payments - If you want to ensure you keep your interest rates low and have low monthly payments, you need to keep on top of your monthly payments, so you don’t lose the benefits of a DMP. A debt management plan is only suitable for those who are willing to pay their arranged monthly payments and are serious about paying off their debt.

In some cases, not all creditors will agree to the debt management plan - Not all creditors will agree to a debt management plan. Most creditors are reasonable and understand that a debt management plan will help the debt to get paid, so they are likely to agree with the programme. We will negotiate with your creditors to highlight the benefits of agreeing, however, it is not guaranteed. If one or more of your creditors declines the DMP, it may not be the best course of action to pay off your debts. Considering an IVA may be the better option. When you are in contact with our financial debt advisors, we will be able to advise on which debt repayment method is best for your circumstances.

Debt Management Plan FAQ's

A DMP is an informal flexible arrangement where you maintain a regular affordable payment towards unsecured debts. There are fewer criteria needed to be eligible for a DMP than an IVA and this can be reassessed at any point to ensure payments are affordable. Not all credit has to be included in a DMP, and assets owned do not affect eligibility for this option.

An IVA is a fixed formal arrangement which can only be applied for when debts owed are more than £5,000 and outweigh any assets you may have. Generally, an IVA would require a minimum monthly payment of £100. If an IVA is possible, some debt can be written off through this and you would usually be debt-free after 5 years. This can sometimes be extended to 6 years if you have a property with sufficient equity.

A DMP does not officially show up on a credit file as it is an informal solution. However, if an account has not already been defaulted due to missed or reduced payments, then a default would usually be applied once the monthly minimums are no longer being maintained.

The length of a debt management plan depends on the amount being paid to your plan per month, how much debt is being paid and how many different accounts you need help with. The more that is paid each month, the shorter the timescale would be. Extra payments can also be made at any point which speeds up the time of the plan.

Yes, as long as they give authority to us for you to speak on their behalf and can sign documentation that is sent to set up the plan. If your partner/family member already has a plan with us and they want you to speak with us, they can prove authorisation for you to speak with us on their behalf. This helps if the client is ill, struggling to deal with finances or overseas etc.

It cannot be guaranteed that interest and charges will be frozen with a DMP. However, we negotiate with your creditors to stop all interest, charges and action against you and in 99.9% of cases we are successful.

How can we help?

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Helpful Tools

Types of Debt

Debt Planning Tools

How can we help?

Online Debt Advice

Helpful Tools

Types of Debt

Debt Planning Tools

This is question one

We could help you manage your debts with a DMP

What is a DMP?

Key Facts Of A DMP