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Debt Relief Orders
A Debt Relief Order (DRO) is a form of insolvency designed to help people with relatively low debt, little surplus income and few valuable assets.
A DRO is similar to bankruptcy, but for people with income and assets of value low enough to be excluded from bankruptcy – so the process is less complex and cheaper.
DROs were introduced as the fees to petition for your own bankruptcy (currently £680) meant many people for whom bankruptcy was the best solution for them were unable to afford to do so.
Getting A DRO
Application for a DRO must be done via an approved intermediary. This is a person who has been granted special permission by an appropriate body to act in such matters.
- Be unable to afford current repayments and charges
- Owe no more than £30,000 in unsecured debts
You must include ALL your debts. You can’t selectively write off part of a larger total by a DRO. - Have assets totalling no more than £2,000 excluding a motor vehicle
Only non-essential items that can easily be sold are taken into account. You can own a car worth up to £2,000. - Have a disposable income of no more than £75 per month
This is your income minus reasonable living expenses, not counting your debt repayments, as defined using creditor accepted guidelines. - Have lived or worked in England or Wales within the last 3 years
- Have not applied for a DRO within the last 6 years
- Not subject to any other current formal insolvency procedure
including a bankruptcy petition that has not been dismissed – unless the person who presented the petition agrees to you entering the DRO. - Not currently subject to a BRO/BRU or a DRRO/DRRU
DRO Benefits
Affordable costs
The £90 fee is much less than the £680 you’d need to find to go bankrupt
Confidence of good advice
The process ensures you receive suitable advice and you fit the criteria for a DRO before proceeding.
All debts written off
A DRO lasts for 12 months after which all included debts and written off
Creditor protection
Creditors included in a DRO can’t take action against you without a very good reason and the Court’s permission.
You will remain liable to pay certain debts – in particular: Student loans, Fines, debts arising from family proceedings, budgeting loans and crisis loans owed to the Social Fund.
DRO Considerations
These are mainly the same as bankruptcy considerations and restrictions, plus the following:-
Not for homeowners
You cannot do a DRO if you own a property, even if it is mortgaged and you have little, no or negative equity in it.
Debt relief restrictions order (DRRO)
This can be issued if your behaviour is considered to have been reckless or deceitful; and can extend the restrictions of the DRO for 15 years.
Important:
If during the DRO your circumstances change such that you no longer qualify; for example you can afford more than £75/month towards your debts; you’re legally obligated to inform the Official Receiver. The DRO will be terminated and you’ll be back where you started – remaining liable for the debts in full.
We do not currently provide DROs but offer a free consultation to determine your suitability and will refer you accordingly.
We’ll answer your questions to help you decide if going bankrupt is the right option for you.