Clicky

Debt Relief Order

CLICK TO APPLY FOR HELP

What is a Debt Relief Order – DRO?

A Debt Relief Order is an official order granted by the official receiver that if approved will freeze your debts, interest, charges and creditor recovery procedures for a period of 12 months. If after 12 months your situation has not changed, then any unsecured debts will be written off.

Is a DRO suitable for me?

A DRO may be appropriate if:

  • You have lived or worked in England and Wales in the last 3 years.
  • You are not currently bankrupt, have an interim order or an individual voluntary arrangement.
  • You have unsecured debts which total less than £50,000.
  • The value of your assets and savings are less than £2,000, and your car is worth less than £4,000. 
  • Your monthly disposable income is below £75.

A period of 12 months will be granted during which all debt payments and interests are frozen by your creditors, if after 12 months your situation has not changed then your unsecured debts will be written off. Debts covered by a Debt Relief Order generally include credit cards, overdrafts, loans, store and catalogue cards, rent, council tax, utility, phone bills, Revenue debts including overpaid benefits, self-assessment tax, VAT and PAYE/NIC.

Please take a look at the information we provide for each solution, and the applicable fees. There are various options that exist to help you deal with your debt problems. These include: Individual Voluntary Arrangements (IVAs), Bankruptcy, Debt Relief Orders, Debt Management Plans, and Debt Consolidation (Subject to suitability and criteria). Entering a debt solution will affect your credit rating. 

If you live in Scotland, the solutions are different, please visit Scottish Debt Solutions.

To discover more about how to manage your debt and to receive free debt advice visit  www.moneyhelper.org.uk

What does the service cost and who can I speak to?

There is no fee to apply for a DRO. You can Apply for a DRO through an approved intermediary. There is a list of approved intermediaries listed on the insolvency service website.

The Debt Advisor Ltd is regulated by The Financial Conduct Authority. This means we are able to offer debt advice and deliver both formal and informal solutions. We are a commercial organisation and if you choose a solution with us fees will apply. Fees vary dependent upon solution and will be discussed with you. Alternative free-to-consumer debt services are available from the Money Helper website.

We hope that the information and debt advice on this site including Frequently Asked Questions, will help inform you.

Benefits
  • A Debt Relief Order is designed to be a low cost debt solution and an alternative to Bankruptcy if you have a debt level of £50,000 or less, little or no savings and few assets as detailed above.
  • Although a Debt Relief Order is a formal solution the outcome is that for a period of 12 months you will have your debts and interest incurred frozen and if your situation has not changed after 12 months your debts will be written off.
  • If you qualify for a DRO, you can potentially write off up to £50,000 of unsecured debt.
  • Lenders are not allowed to contact or chase you for payment and you do not need to make any payments to lenders for 12 months.
  • There are no fees to apply for a DRO and there are no monthly payments required.
Risks
  • Not all debts qualify to be written off under a DRO. Debts such as student loans, child support maintenance and magistrates courts fines are ineligible under the scheme.
  • If you have given away assets, sold goods for less than their value or paid certain creditors in favour of others in the 2 years prior to your DRO application, a DRO could be refused.
  • A Debt Relief order will affect your credit rating and will appear on your credit file. You may find it difficult to obtain credit for a period of 6 years.
  • Your details will be added to the insolvency register, this is a public register.
  • If your circumstances improve during the 12 months, then your DRO may be cancelled.

The DRO Process

If you meet the eligibility criteria an approved intermediary will complete your application and send your application to the Insolvency Service. If your application is successful, your DRO will also be added to your credit reference file. It will usually show on your credit reference file for 6 years.

Once you get your DRO, you stop making payments towards the debts listed in it. A DRO lasts 12 months. This is called the DRO period, which can be extended in some cases. At the end of the period, your DRO is closed, and you will not have to pay your debts back. You do have to keep paying any regular commitments during the DRO period, like rent and bills. Your affairs will be investigated and if your behaviour prior to the DRO is found to be dishonest (gifting away assets, or being dishonest) you could face a Debt Relief Restrictions Order.

GET DEBT HELP

Restrictions

Once you are granted a DRO, you will have to follow certain restrictions during the DRO period. If you apply for an overdraft or a new account, you must tell the bank or building society about your DRO. You cannot:

  • borrow more than £500 without telling the lender about your DRO – whether you’re borrowing on your own or with someone else.
  • write cheques when you do not have sufficient funds.
  • apply for another DRO for 6 years from the date your DRO is approved.

You will not be able to:

  • act as a director of a company.
  • create, manage or promote a company without the court’s permission.
  • manage a business with a different name without telling anyone you do business with about your DRO.

For full information relating to a DRO and details of an approved intermediary from MoneyHelper “What is a Debt Relief Order (DRO)?“