Debt Relief Orders

What is a debt relief order?

Debt relief orders (DRO) are a form of insolvency procedure designed to assist those who have no assets and minimal surplus income.

They came into force on 6 April 2009 and can be obtained without the use of the courts. It is very similar to bankruptcy, and is aimed at helping people who are unable to turn to other debt solutions.

How will a Debt Relief Order help me?

A DRO offers those with less than £15,000 of debt and no more than £300 total gross assets a form of protection from their creditors and the opportunity to become free from their debts within one year. Debt relief orders are intended to provide a solution for those who are unable to repay their debts within a reasonable period of time and when an improvement in their circumstances is unlikely.

Who can get a debt relief order?

A debt relief order is a potential option for a large number of debtors who would not ordinarily qualify for alternative debt solutions, such as an individual voluntary agreement.Any person applying for a debt relief order must meet the following criteria:

• Full repayment of the debt is not possible and is unlikely to be in the foreseeable future.
• The debtors´ total unsecured debts do not exceed more than £15,000.
• The debtors´ total assets do not exceed more than £300. (although your car may be worth up to £1,000)
• The debtors´ total disposable income (income less household living expenses) does not exceed £50 per month.
• The debtor is resident in England or Wales, or has been within the last three years.
• The debtor has not been subject to a DRO within the last six year and is not currently in any other form of insolvency procedure, such as an IVA or bankruptcy.

How can I apply for a debt relief order?

You will only be able to apply for a debt relief order after seeking professional financial advice from a debt advisor. An approved intermediary, which could be the same person or company from whom you originally sought advice from, will then assist you with your DRO application. The intermediary may charge a fee for this service but this cannot exceed £100.

You cannot apply for a DRO without the assistance of an intermediary.

Upon receipt of the application and payment of the fee, an official receiver is able to make the order. This is done without the involvement of the court if it appears that the applicant meets the relevant requirements.

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