What is a Debt Relief Order (DRO)?
Available as of 6th April 2009, a DRO will last for 12 months:
- during which, any creditor named on the order cannot take any action to recover their money unless they have the court`s permission, and
- after which, the individual will be freed of the debts included in the order (unless their circumstances have significantly improved).
DROs don`t involve the courts, and are run by The Insolvency Service in partnership with debt advisers known as `approved intermediaries` - the people who actually help individuals apply to the Service for a DRO.
Would a Debt Relief Order be suitable for me?
As The Insolvency Service website (insolvency.gov.uk) states, a Debt Relief Order is suitable for people who don`t own their own home - but this isn`t the only condition.
People can only enter a DRO if they meet the following conditions:
- They must be unable to pay their debts.
- They must not owe more than £15,000.
- The total value of their assets must not exceed £300 - although they can own a car worth up to £1,000.
- Their disposable income (after tax, national insurance contributions and normal household expenses) must not exceed £50 per month.
- They must live in England or Wales - or have lived / carried out business in England Wales at some time in the last 3 years.
- They must not have been subject to another Debt Relief Order in the previous 6 years.
- They must not be involved in another formal insolvency procedure at the time they apply.
Would a Debt Relief Order write off all my debts?
Some debts cannot be included in a DRO - such as :
- Magistrates` court fines,
- Student loans, and
- Secured debts (debt secured against property)
Secured debts are unlikely to be an issue anyway, as owning property would probably mean you`re not eligible for a Debt Relief Order, as your assets would almost certainly be worth more than £300.
Does a Debt Relief Order come with any restrictions?
Yes - similar to the restrictions you would face if you were declared bankrupt. For example, you would not be able to obtain credit of £500 or more without declaring that you`re subject to a DRO.
- 0800 161 3516
- 0161 605 4824