Debt Relief Order (DRO)

A Debt Relief Order is a formal insolvency procedure, commonly known as an alternative to bankruptcy. This means all your qualifying debts are written off. It lasts for 12 months unless you are subject to a DRRO, though any beneficial change in circumstances within 12 months could mean the DRO is revoked.

A DRO is only available to people who meet the following strict criteria:

  • Resident of England, Wales or Northern Ireland
  • Your debts must not exceed £30,000 (£20,000 for residents of Northern Ireland)
  • You have a disposable income of £75 or less each month (£50 or less for residents of Northern Ireland)
  • You are not a homeowner
  • Your assets, including your car, are worth less than £2,000 in total (£1,000 in Northern Ireland)
  • It has been at least 6 years since your last application for a Debt Relief Order
  • You are not subject to another insolvency procedure such as an Individual Voluntary Arrangement or Bankruptcy

It is important to consider that a DRO will affect your credit profile, as it will be on record for 6 years. Your details will also be listed on the public insolvency register.

But why choose a DRO?

Affordability

DROs are designed for individuals with low income, few assets, and relatively low levels of debt. It provides an affordable debt solution and the associated costs are relatively low compared to other insolvency options.

Debt write-off

Upon completion (usually after 12 months), any remaining qualifying unsecured debts included in the order are written off. This means that individuals are no longer legally obligated to repay these debts, providing a fresh start financially.

Protection from creditors

While a DRO is in place, creditors cannot take legal action to recover debts, such as pursuing court judgments. This protection provides you with relief from creditor harassment and legal actions during the DRO period.

Short duration

Unlike some other insolvency procedures, DROs typically last for just 12 months. After this period, assuming the individual's financial situation has not significantly improved, the remaining qualifying debts are written off. This relatively short duration means that people can regain financial stability relatively quickly compared to longer-term solutions.

Debt Relief Order considerations

Fees

There is a one-off fee of £90 to process your application through an Approved Intermediary.

Credit Rating

The Debt Relief Order will be recorded and have a negative impact on your credit file for a period of six years.

Public Register

Your personal details will be recorded on the Insolvency Register which is a public record.

Change in Circumstances

If your circumstances change during the 12-month period and you no longer meet the eligibility criteria, it is likely that the application will be cancelled, and you will need to make alternative arrangements to pay your debts.

Employment

A Debt Relief Order may impact upon your employment; therefore, you should always check the terms of your employment contract before making an application. You are also unable to be a company director unless you have the permission of the court.

Debt Help UK

  • After receiving our help, a typical customer's debt would benefit from the below.
  • Lower monthly payment
  • Stop Interest & Charges
  • Only 1 monthly payment
  • Stop creditors taking legal action
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