What is a Debt Relief Order?

What is a Debt Relief Order?

A Debt Relief Order (DRO) is a new alternative to bankruptcy introduced in 2009. It is a form of insolvency which can help people who are unable to turn to other debt solutions.

DROs aim to provide debt relief to people who do not own their own home, have little disposable income and assets, and have less than £15,000 of debts. The order lasts for 12 months, during which time creditors named on the order cannot take any action to recover their money unless given court permission.

At the end of 12 months, if your circumstances are still largely the same, you will be legally debt-free. Furthermore, DROs do not involve the courts, but are run by The Insolvency Service. This is in partnership with trained debt advisers – called ‘approved intermediaries’ – who will help you to apply to The Insolvency Service for a DRO.

Will a DRO be suitable for me?

To qualify for a Debt Relief Order, you must meet certain requirements:

What is a Debt Relief Order?

To qualify for a Debt Relief Order, you must meet certain requirements:

  • You must not be able to repay your debts
  • You mustn’t owe more than £15,000
  • Your total assets must be worth £300 or less – though you may also own a car up to the value of £1,000
  • Your disposable income (after normal household expenses) must be no more than £50 a month
  • You must have lived in England or Wales at some time in the last three years
  • You must not have been subject to another Debt Relief Order within the last 6 years
  • You must not be involved in any other form of insolvency procedure (i.e. bankruptcy or an Individual Voluntary Arrangement (IVA)) at the time you apply.

Things to consider

However, for the duration of your DRO, you will be subject to certain conditions. You will be unable to obtain £500 credit or more without informing the lender that you are subject to a Debt Relief Order.

Additionally, a Debt Relief Order will show on your credit history, and remain there for 6 years. So even though your DRO proceedings may come to an end after a year, you could still have difficulty obtaining further credit for five years afterwards.

The fee for a DRO currently stands at £90, and must be paid in full to the official receiver before your application will be considered.

According to The Insolvency Service, since the DRO’s introduction two years ago, the group of people applying for DROs ‘comprise some of those individuals who would have otherwise been declared bankrupt (…) and other individuals who, perhaps, could not have afforded the fee to enter into bankruptcy and who may have otherwise been in an informal debt management process, or been unable to access any form of debt resolution’.

Related resources:

  • http://www.insolvency.gov.uk/otherinformation/statistics/201105/index.htm
  • http://www.insolvency.gov.uk/bankruptcy/DRO/debtors.htm


What is a Debt Relief Order? — 7 Comments

  1. Hi cheers for the info, i have a DRO as of the 18th of august 2011 yet a balliff is still harassing me. i’ve told him i have a DRO but he says it doesn’t matter i still have to pay because the have a court order (which was before the DRO was in place) is he right i’m sure he’s not. he’s treatening to come round to remove goods from my home Confused?????????????

  2. My problem is similar to Nick’s. My DRO was approved on 19/10/11. The bailiff claims that unless the original company (the council) have been informed, their instructions stand and they will pursue the debt.
    Before I proceeded with the DRO application I raised the following concern with my solicitor, I asked whether the original co. (the council) should be listed on the application as I am aware the council could simply instruct another bailiff co. making my order void. The solicitor said as long as I had the council’s ref on the application all is well ????? I’m so confused.

  3. Dear Johnny Debt,

    I have similar problem. My DRO is in place as of 30th March. I have two companies not leaving me alone, constant harrassment, several phonecalls a day, several e-mails a day.
    Threatening me with court order and this week door collection agents.
    I’m also mentally ill at the moment and I can’t be held responsible for my actions if someone comes to my parents house and starts threatening or being rude to me.
    I need urgent help before I lose it.

  4. I have been asked for my dro ref no. There are a few no’s on my paper work and i have concentration issues due to depression medication. Which 1 is it?

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