What are Debt Relief Orders?
Debt Relief Orders (DROs) came into force in the UK on 6th April 2009. Issued by the Government’s Insolvency Service, they are aimed at offering financial aid to those with debt, as a quicker and cheaper alternative to declaring bankruptcy. They are also available to assist people who have been turned down for an Individual Voluntary Agreement (IVA) or a Debt Management Plan (DMP)
DROs are available to those with a low income, few assets and who will otherwise struggle to pay off a debt within a reasonable amount of time. A DRO provides a legally binding alternative to an IVA or DMP where a debtor is unable to repay a debt via any other existing means.
Who is eligible for Debt Relief Orders?
DROs are available to those who:
- Are unable to repay their debts.
- Have unsecured loans totalling £15,000 or more.
- Have assets of less than £300, excluding a car of less than £1000 in value.
- Have a surplus (disposable) income of less than £50 per month, as defined using common financial statement.
- Live in England or Wales, or, for the last three years, have been resident or carried out business there.
- Not have an existing Bankruptcy Order, Bankruptcy Restrictions Order or an IVA, or have had a DRO within the last six years.
Who can benefit most from Debt Relief Orders?
DROs are designed to benefit those who do not own their own home, have low income and/ or have no realisable assets of a value of more than £300. They may also be dependent on State Benefits or be in debt due to a crisis or accident and wish to pay off their debts but simply cannot.
How much does a DRO cost?
A DRO costs £90, which is a considerably cheaper solution to debt problems than filing for bankruptcy. Many of the features and processes of DROs are similar to those of bankruptcy, but have been modified to be more cost-efficient.
How will a DRO protect me financially?
For more information on:
- Are there any restrictions put in place if I am approved for a DRO?
- Are there any negative outcomes of gaining a DRO?
- How can I apply for a DRO?