Debt Relief Order

A Debt Relief Order or DRO, is another alternative to Bankruptcy available to people who are struggling to repay their debt and have a very low disposable income. A DRO doesn’t cost as much to process as Bankruptcy. All you pay is a one-off fee of £90 to submit the application to the Insolvency Service.

Who can apply for a Debt Relief Order?

You could qualify for a DRO if you:

• Are unable to pay your debts
• Have unsecured debts that do not exceed £15,000
• Have assets that do not exceed £300
• Have a disposable income of £50 or less after deducting general living costs and bills
• Have not had a Debt Relief Order within the last 6 years
• Are not involved in another formal insolvency procedure when applying for a Debt Relief Order

The above criteria is to be used as a guide only, we recommend that you speak to an expert advisor for more details.

The typical duration of a DRO is 12 months during which time, none of your creditors included in the DRO can take action against you. At the end of the DRO period, you’ll be free from all the unsecured debts listed in the order.

Advantages of a Debt Relief Order

• Alternative to Bankruptcy:A DRO is an alternative to Bankruptcy for those with little assets or disposable income.
• Clear debts:All unsecured debts included in the DRO will be cleared after 12 months.
• No monthly charges:All you pay is a one off fee of £90 which is paid directly to the Insolvency Service.
• No appointment:Unlike Bankruptcy, you do not need to book an appointment at the courts to process your application

Debt Relief Order: what you need to know

• Legally binding:You must co-operate fully with the Officer Receiver throughout the DRO process.
• Credit rating:Your credit rating will be affected for 6 years after the DRO, which will also remain on public record for 15 months.
• Obtaining credit:You could have problems securing credit in the future (either alone or with someone else).
• Debts:Only unsecured debts can be included in a DRO. For example: personal loans, store cards, credit cards, bank overdrafts, catalogue accounts.