Debt Relief Order (DRO)

What is a Debt Relief Order?

If you are struggling with debt, don't own your own home and have little disposable income then a Debt Relief Order may be an option for you. Debt Relief Orders were first introduced in April 2009. They are designed to provide a debt solution for people on low incomes and with few assets. Approved by the Insolvency Service they offer a cheaper alternative to bankruptcy.

How do Debt Relief Orders work?

Debt Relief Orders are issued by the bankruptcy court and usually last for 12 months. During this time your debts are frozen meaning that -

  • Your creditors aren't allowed to take action to recover the debt without permission from the court
  • You do not make repayments on your debts

At the end of this 12 month period your debts are written off. Should your financial situation have improved during this time then the DRO can be changed or cancelled.

How much does a Debt Relief Order cost?

The fee for a Debt Relief Order is £90. If you are unable to pay the full amount immediately then in some circumstances you may instead be able to pay in instalments. When paying in instalments there is a time limit of six months from the time you make the first payment. The fee must be paid in full before your application can be considered.

What debts can be included in a Debt Relief Order?

Not every type of debt can be included in a DRO. Qualifying debts include -

  • Credit cards
  • Loans
  • Overdrafts
  • Phone and utilities bills
  • Council tax

Court fines, student loans and child support payments can't be cleared with a Debt Relief Order and so if you have these types of debt you must clear them separately.

Do I qualify for a Debt Relief Order?

Debt Relief Orders aren't available to everyone and so for one to be an option you must meet certain qualifying criteria. Generally you can apply for a Debt Relief Order if -

  • You have unsecured debts of less than £15,000 that you are unable to repay
  • You have few, if any, savings or assets i.e. no higher than £300
  • Your disposable income after essential household expenses is less than £50
  • You have lived, run a business or owned property in England, Wales or Northern Ireland within the last 3 years
  • You are not involved in any other formal insolvency procedure such as an IVA or bankruptcy

How will a Debt Relief Order affect my credit rating?

If you enter into a DRO it will be listed on your credit file until three months after the Order ends. A record of it will however remain for six years. During this time you may find it harder to get credit or to open a new bank account.

Advice on your debt relief options

Based in Blackburn, Royal Exchange offer help and advice on the personal debt relief options available to people in the UK.

For more information about Debt Relief Orders, bankruptcy and other solutions to debt call us today on 0800 028 4422. Alternatively complete the enquiry form to request a call back from one of our sympathetic debt counsellors.