A debt relief order (DRO) is a form of simplified bankruptcy to enable people with relatively small amounts of debt and income and almost no assets to write off their debts. A DRO is made by the official receiver from the UK Governmentâ€™s Insolvency Service.
You can only apply for a DRO through approved intermediaries â€“ authorised debt advisers who assist individuals with the completion and submission of a DRO application. DRO lasts for one year, and once it has ended you are released from your debts (with some exceptions).
A DRO is available to people who are struggling to pay their debts of no more than ÂŁ20,000, whose assets are no more than ÂŁ1,000 and whose disposable income, after deducting normal household expenses, no more than ÂŁ50 per month. Certain assets are excluded from the calculation, for example clothing, furniture and a vehicle worth less than ÂŁ1,000. There is a fee of ÂŁ90 payable to an approved intermediary. The application is then considered by the official receiver from the UK Governmentâ€™s Insolvency Service.
Your debts included into the DRO will be written off at the end of it. There are a few exceptions, see below.
Creditors listed in the DRO application canâ€™t take further action against you without the courtâ€™s permission.
You can make a fresh start after one year.
It only cost ÂŁ90.
You can keep your belongings and a cheap car.
A DRO is entered on a public register.
You canâ€™t have a DRO if you are bankrupt or subject to bankruptcy restrictions, have an individual voluntary arrangement (IVA) in place or you have had a DRO in the last 6 years.
You wonâ€™t be able to have a DRO if you own a house, even if the outstanding mortgage balance is higher than the house market value.
You still need to pay some of the debts â€“ in particular student loans, court fins, debts arising from family proceedings, child maintenance, social fund loans and fraud-related debts.
Your employment may be affected.
Your DRO could be cancelled if you donâ€™t co-operate with the official receiver.
You canâ€™t act as a director of a limited company or be involved in its management.
You canâ€™t get credit over ÂŁ500 without telling the lender about your DRO.
If you have obtained debts knowing you canâ€™t pay them (culpable or irresponsible actions) or have been reckless (for example gambling) or dishonest (involved in fraud), you may have a debt relief restriction order (DRRO) made against you for 2 to 15 years. The DRRO will not extend the term of your DRO but will mean that for a period of between 2 and 15 years certain restrictions will apply.
We provide information and advice in relation to debt solutions available in England and Wales.
There is no charge for the initial financial review and initial consultationÂ over the phone. However, if you decide to go ahead with our bankruptcy assistance service fees will be payable. Click here for further details on our fees.
You have a 14 days cooling off period from the commencement of our service. If you decide to cancel the service during this time, we will refund you any fees paid to us by you for the service.
If you are made bankrupt, your property and assets could be at risk and your credit rating will severely be affected for six years. Click here for details on bankruptcy restrictions.
For further information about bankruptcy we recommend the Insolvency Serviceâ€™s booklet â€śGuide to bankruptcyâ€ť. The Insolvency Services also produces a guide which explains the various debt solution options. You can read it here: â€śIn Debt? Dealing With Your Creditorsâ€ť.
If you wish to know where to get free debt counselling and debt management services you should contact the Money Advice Service.