Debt relief order (DRO)
DROs were introduced by the Government in 2007 to help those with few assets and relatively small debts to recover financially. DROs have proven to be a popular insolvency measure, particularly amongst people with low incomes. All DROs must be made with the assistance of an ‘intermediary’ approved by the Insolvency Service. This can be a solicitor, a qualified accountant or an insolvency practitioner.
An IVA is an alternative to a DRO but there are certain criteria that must be met (such as debt level, number of creditors and an ability to pay more than £75 each month). So an IVA may not be suitable for many people. If you feel another option such as a DRO is preferable, you will be provided with enough information to make an informed decision. You will then be signposted to a regulated provider who can help you with an alternative option.
A DRO stops your creditors from taking any action against you for 12 months. If your financial position improves during this time, you may be expected to recommence payments of your debts. If you are still not earning sufficient income within a year, these debts will be discharged and your creditors will not be able to claim any more money from you.
Would I qualify for a DRO?
It is likely that your DRO application will be approved if:
- You can prove you cannot pay your debts
- You owe no more than £50,000
- Your assets are not worth more than £2,000
- Your vehicle is worth less than £4,000 (in Northern Ireland less than £2,000)
- You cannot own your own home
- Your monthly disposable income after household expenses is less than £75
- You live in England or Wales
- There is no fee to apply for a DRO
Debt Relief Orders are for people with relatively low levels of debt who own few assets and have low surplus income. You cannot already be involved in other insolvency procedures such as an IVA or bankruptcy.
Learn more about obtaining a DRO
The Debt Advisor Ltd can provide you with information about the application process, as well as what a DRO entails. You could be referred to a DRO intermediary who can help you obtain a DRO if this is your chosen solution for your debt problems.
Debts covered by a DRO
Debts that can go into a DRO are called ’qualifying debts’. During the DRO period, creditors can’t ask you for payments – if they do, you don’t have to pay them. They include:
- credit cards, overdrafts and loans
- arrears with rent, utility bills, telephone bills, council tax and income tax
- benefits overpayments
- buy now – pay later agreements
- bills for services like vets or solicitors
- debts you owe to friends and family
- business debts
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September 2024, Glen
I found Bennet Jones 5 years ago was really struggling financially. They helped me set up my IVA and the process from start to finish has been amazing. The support I have been given over the last 5 years goes above and beyond what I expected. Would highly recommended If your struggling with debt please don't bury your head in the sand it's an easy process for manageable payments every month and know more hiding behind the sofa. Thanks to everyone at Bennett Jones.