Debt Relief Order
Offering an alternative to Bankruptcy, a Debt Relief Order can help you manage your personal debts outside of an insolvency situation
A Debt Relief Order is intended to give 'relief' to individuals who owe a relatively small amount, have no disposable income or assets with which to repay what they owe and who cannot afford to make themselves bankrupt.
What is a Debt Relief Order (DRO)?
A DRO is way of gaining control over debts. It ‘freezes’ debts and the interest charged on those debts and ensures that no creditors are able to take enforcement action for collection. At the end of a Debt Relief Order, the individual’s debts are written off.
Am I eligible for a DRO?
How does a Debt Relief Order work?
You make an application for a Debt Relief Order through an authorised debt adviser. The Official Receiver will then oversee the DRO for the next 12 months. Entering a Debt Relief Order costs £90 in government fees.
Whilst in a DRO, the restrictions placed upon the individual are similar to those placed upon people in Bankruptcy. These include not being allowed to act as a company Director, borrow over £500 without telling the lender about the Debt Relief Order and creating or promoting a company without permission of the Court. As with Bankruptcy, these restrictions can be extended in certain circumstances, with a Debt Relief Restriction Order or Undertaking. These are usually applied where an individual has been dishonest.
Details of the DRO will be included on the Individual Insolvency Register and are removed three months after the Debt Relief Order ends. Details of the DRO stay on a credit record for six years.
A Debt Relief Order can be cancelled if an individual does not cooperate with the Official Receiver or if their finances improve during the DRO.
Like Bankruptcy, some debts are not cleared by a DRO: student loans or Court fines and ongoing bills still need to be paid during the Debt Relief Order.