Debt Relief Order - Debt Support Direct

Debt Relief Order (DRO)

A Debt Relief Order (DRO) is a way of dealing with your debts if you can’t afford to pay them. It means you don’t have to pay certain debts for a specified period (usually 12 months).

At the end of the DRO period, the debts included in it will be written off (‘discharged’), and you won’t have to pay them.

If you obtained any debts through fraud, you must restart paying them when the DRO has ended.

If your circumstances change to pay some or all of your debts, your DRO may be revoked so you can arrange to pay your creditors (the people or companies you owe money to).

Free and impartial money advice is available from the Money Helper, an organisation set up by the Government for people in debt.

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Debt Relief Orders (DROs)

Debt Relief Order

To be eligible for a DRO, you must meet these criteria:

you owe £30,000 or less
you have less than £75 to spend each month, after paying tax, national insurance and normal household expenses
you’ve lived or worked in England or Wales in the last 3 years
your assets aren’t worth more than £2,000 in total, including vehicles.
you’ve not had a DRO in the last 6 years

You won’t be eligible if you are involved in bankruptcy proceedings or any other formal insolvency procedure. However, if one of your creditors has asked a court to make you bankrupt, you may ask the creditor for permission to apply for a DRO instead.

Benefits of a Debt Relief Order

Your debts will be written off at the end of the DRO. There are a few exceptions, as explained opposite.
None of the creditors listed in the DRO application can take further action against you without the court’s permission.
It allows you to make a fresh start after 1 year.
The fee (£90) is affordable and can be paid in instalments, but the fee must be paid before the application can be made.
You will keep your assets and a vehicle as detailed above.
The approved intermediary ensures that you are given appropriate advice and that you fit the criteria for a DRO.

Considerations

Your DRO is entered on a public register.
You can’t have a DRO if you have an existing bankruptcy order, an IVA, are subject to bankruptcy restrictions, or you have had a DRO in the last 6 years.
You won’t be able to have a DRO if you own a house, even if it has no equity (value).
You will remain liable to pay certain debts – in particular student loans, fines and some debts arising from family proceedings.
Your employment may be affected.
Your DRO could be revoked (withdrawn) if you don’t co-operate with the official receiver during the year your DRO is in force.
You can’t act as a director of a company or be involved in its management unless the court agrees.
You will be committing an offence if you get credit of £500 or more without disclosing that you are subject to a DRO.
You may have a debt relief restrictions order* made against you for 2 to 15 years if you acted irresponsibly, recklessly or dishonestly.

* An order that will place restrictions similar to those in force while subject to a DRO, which the official receiver may apply for.

Source: In Debt? Dealing with your creditors – The Insolvency Service

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