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Debt Relief Order

What is a Debt Relief Order?

A Debt Relief Order or DRO is like a miniature form of Bankruptcy that came into existence in the United Kingdom on April 6, 2009. It is most suited to people who have lower spare income and little or no assets. Unlike other Insolvency solutions, a DRO is not handled via the Courts. Most free debt advice providers have approved intermediaries who can help you with your DRO application. There is a fee of £90 to arrange a DRO. This can be paid in instalments if need be.

In order to qualify for a DRO your unaffordable debts must not exceed £20,000 and you cannot have more than £1,000 worth of total assets. You can also own a vehicle that is worth no more than £1,000. Your spare income cannot exceed £50 per month after you have paid all personal and household bills.

The full Criteria are as follows:

  • You must be a resident of England, Wales or Northern IrelandYour total monthly disposable income is less than £50 per month
  • Your total unsecured debts is less than £20,000
  • Your total assets are less than £1,000
  • You don’t own a car above the value of £1,000
  • You have not had a Debt Relief Order in the last 6 years
  • You are not currently involved with any other form of insolvency procedure

You will normally find out if you are suitable for a DRO after speaking with a debt advisor who will identify what options are suitable and if a DRO is your beat option. They will be able to point you in the direction of an approved intermediary that can help you put together your DRO application. Examples of DRO providers are your local CAB, StepChange or the Institute of Money Advisers.

After the application has been made and the payment received, an Official Receiver can make the order. If you meet the criteria, the process will go ahead.

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Find out about a DRO by reading our questions and answers below. If you have a question that isn't covered here, be sure to get in touch with us and we'll be happy to answer any queries you may have.

A DRO usually lasts for 12 months. During this time, you will be under certain restrictions. You will also be protected against any action by the creditors that have been included in your application.

The Official receiver in charge will send a notice of the DRO to you and outline all duties and restrictions applicable to you.

The Official receiver will send a notice of the DRO to the creditors involved.

The details of your DRO will be placed on the Insolvency Register.

You will be required to continue with your normal household bills such as rent, council tax, utilities etc...

If your circumstances change you will have to let this information be known to your Official Receiver. If you come into a financial windfall, for example, you will be required to pay back your creditors.

There are a number of restrictions when you enter a Debt Relief Order:

  • You must not take on more than £500 in credit without disclosing that you have a DRO
  • You must not be involved with the management or formation of a limited company or act as a director with the permission of the court.
  • You must not carry on business in a different name after being granted the DRO without contacting the people who you have done business with under your previous name.
  • You will only be able to obtain a Debt Relief Order once every six years.

These restrictions may be extended if the Official Receiver determines that you have acted dishonestly or improperly.

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