Debt Relief Order (DRO)

A Debt Relief Order (DRO) is a formal debt solution and may be suitable for those with relatively low liabilities, little surplus income, have few assets. It is a cheaper option than bankruptcy for those who meet the required eligibility criteria.

To qualify for a Debt Relief Order (DRO) you must:

be unable to pay their debts
have total debts of no more than £50,000 (not including some debts - see "excluded debts" below)
not have gross assets of more than £2,000
have disposable income of less than £75 per month
not own a vehicle (car / motorbike) that exceeds £4000 in value (the value of the vehicle is ignored if it has been adapted for disability purposes)
be domiciled in England or Wales, or in the last 3 years have been a resident or carried on in business in England or Wales
not have been subject to a Debt Relief Order (DRO) within the last 6 Years
not be subject to a DRRO /DRRU
not be involved in any formal insolvency procedure (this includes an interim order) at the time of application for a DRO
not have an outstanding bankruptcy petition where you have not been referred for a DRO by the court
get the permission of a creditor to apply for a DRO where you have been notified that they have presented a bankruptcy petition against you

Debt Relief Orders (DROs) are applied for with the help of an Approved Intermediary (an intermediary is usually a skilled debt adviser who has been given permission to complete the forms and give advice on debt relief orders) and will last for one year after which you will be released from your debts (with some exceptions)

Excluded Debts

Some debts, called excluded debts, are not covered by the DRO. This means the creditor can continue with action to recover the debt after the DRO is made and the client will still be liable for the debt at the end of the DRO. Excluded debts must still be shown on the DRO application but do not count towards the debt limit.

The following debts are excluded:

magistrates court fines. This includes costs and compensation orders made by the magistrates and financial penalties registered for enforcement in the magistrates court as if they were fines.
student loans made under the Education (Student Loans) Act 1990 and the Teaching and Higher Education Act 1998
child support
maintenance, lump sums and costs ordered in family proceedings
money due under a criminal confiscation order
damages payable for personal injury or death because of negligence, nuisance or breach of a statutory, contractual or other duty, or payable under Part 1 of the Consumer Protection Act 1987.

Some Advantages

debts written off at the end of the Debt Relief Order (with possible certain exceptions)
none of the creditors listed in the DRO can take further action without the courts permission
allows you to make a genuine fresh start after 1 year
affordable fee, no longer applicable
allowed to keep a vehicle (car / motorbike) up to the value of £4,000
allowed to keep a vehicle which has been adapted for disability purposes

Some Disadvantages

details of DROs are entered on the Insolvency Service Public Register
the DRO could be revoked (withdrawn) if you do not co-operate with Official Receiver during the time the DRO is in force
your employment may be affected
damaged credit rating / committing an offence if you obtain credit of £500 or more without disclosing that you are subject to a DRO
you may have a restriction order (2 to 15 years) made against you if you are deemed to have acted irresponsibly, recklessly or dishonestly
you cannot act as a director of a company or be involved in its management unless the court agrees
certain debts cannot be included - for example - student loans, fines, child maintenance, social fund loans, court fines & confiscation orders (these are fines relating to criminal activity)
if your financial circumstances improve during the period of the DRO (eg. if you find employment) your DRO may face being revoked

Useful Links

Insolvency Service
0845 802 9846
Standard Financial Statement (SFS)
DRO Advice and Support Forum - Money Saving Expert

What do I do next?

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If you want to explore the other options for dealing with debt you can read about other options