Debt Relief Order

DRO (Debt Relief Order)

How much debt can I have?

You can only owe a maximum of £20,000 to qualify for a DRO. There is no minimum amount.

What type of debt will be included?

Almost all debts can be included, some exceptions are student loans, court fines, or maintenance arrears, child support arrears, debts built up through fraud, debts arising from a personal injury claim or crisis loans.

When will I be free from my debts?

You will be discharged from your debts after one year.

How does this option work?

You can apply for a DRO with the help of a debt adviser who has been appointed as an approved intermediary by the Insolvency Service.

There are eligibility criteria to meet to qualify for a DRO, and these are:
– Your debts are £20,000 or less
– You have £50 or less spare monthly income each month after paying for your essential outgoings
– Your motor vehicle is worth £1,000 or less
– Your other assets are worth £1,000 or less
– You have not had a DRO within the last six years

In your DRO is approved all your debts other than those listed above are written off after 12 months.

A DRO is generally a good option when you owe less than £20,000, have limited assets and rent your home.

What are the advantages?

  • It allows you a fresh start if your circumstances do not approve within 12 months
  • Your debts are fully written off
  • There is no court hearing
  • It removes all stress and anxiety with dealing with your debts and creditors
  • You do not have to pay monthly payments from your income in a DRO
  • It has a much cheaper fee than bankruptcy (currently £90)

What are the disadvantages?

  • The criteria for a DRO is strict so you must meet the criteria otherwise you cannot apply for one
  • If you forget about a debt, you cannot include it later
  • Details of your DRO is held on the Individual Insolvency Register
  • A DRO will seriously affect your ability to get credit in the future
  • There are some type of debts that will not be written off
  • If you are self-employed, you could find it difficult to continue to trade
  • You need to find the money for the costs (currently £90)
  • You could have a “debt relief restrictions order” made against you for any dishonesty or unfit conduct
  • The official receiver could take criminal action against you if it determines you supplied false information, or committed an offence, for example fraud or money laundering.