A Debt Relief Order (DRO) is designed for people who have a low income, few assets and who’s debts are less than £20,000. If you meet the acceptance criteria it is cheap to implement costing just £90. The solution is relatively new having only been made available in England and Wales in April 2009. It was introduced in Northern Ireland in June 2011.
Government Advice about Dealing with Debt
As well as the information found on this website the Government’s Insolvency Service has produced a useful guide to personal debt solutions which you might also find useful: “In Debt – Dealing with your creditors”.
The Money Advice Service (MAS) are an independent service set up by the Government to provide people with free advice about all aspects of personal finances. For help from MAS if you are struggling with debt please follow this link: MAS – Help if you are struggling with debt.
It is also recommended that you read this one page document produced by MAS entitled “Dealing with debt – 5 things you should know”.
What is a Debt Relief Order?
A Debt Relief Order is designed to help you resolve debts that you will never be able to repay yourself in a reasonable period of time. If you meet the criteria and are able to start a DRO then all of your debt will be taken away from you and you will not be expected to make any more payments towards it. After 12 months you will be released from the agreement and the debt you owed is completed written off leaving you to get on with your life debt free. The key facts about the DRO solution are available here.
Is a Debt Relief Order suitable for me?
Not everyone is eligible to start a DRO. Firstly the solution is only available for people living in England, Wales and Northern Ireland. It is not available for people in Scotland. In addition some strict acceptance criteria have to be met.
**Update** As of the 1st October 2015 the criteria for starting a DRO have changed. The amount of debt you can have and still be eligible has increased from £15,000 to £20,000. In addition you are now allowed to have assets worth up to £1000 in addition to a car worth up to £1000.
Do you want to start a DRO? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts
How Do I get a Debt Relief Order?
Because a Debt Relief Order is a formal legally binding solution you cannot simply start one yourself. You will need the help of an authorised debt counsellor. They will check that you are eligible and help you complete the necessary application form. This will then be forwarded to the Official Receiver who will authorise the DRO and then deal with your creditors on your behalf.
How much is Debt Relief Order?
Because the people it is designed to help have little or no surplus income the DRO solution is relatively cheap to implement. There is a one off up front charge of £90. However after that there no requirement to make any further payment towards your debts.
Debt Relief Order Living Expenses Guide
One of the key things you will have to do if you are considering a Debt Relief Order is complete a living expenses budget. This can then be used to calculate your monthly surplus income. You will only be eligible to apply for a DRO if your surplus income is less than £50/mth. As such it is very important to get your living expenses budget right. If you complete it incorrectly you may be wrongly prevented from using this solution.
How will a DRO affect my Credit Rating
If you start a Debt Relief Order your credit rating will be negatively affected for 6 years. However there are some some forms of credit which you can continue to use while the DRO is in place.
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