Debt Relief Order (DRO)
Learn more about Debt Relief Orders (DRO)
What is a Debt Relief Order (DRO)?
Debt Relief Orders (DRO) is a formal debt solution designed to help people with little or no assets and low income deal with their debts and make a fresh start with their finances.
If you don’t own your own home, have less than £75 of spare income each month and are looking for a way to deal with debts totalling less than £50,000, a Debt Relief Order (DRO) could be the ideal solution for you. It is an alternative debt solution to Bankruptcy or an Individual Voluntary Arrangement and is available to residents of England, Wales and Northern Ireland.
How Does a Debt Relief Order (DRO) Work?
A DRO is typically only issued when it seems unlikely that you’ll be able to clear your personal debts, and you meet the qualifying criteria. If after speaking to an Insolvency Practitioner about your situation they determine that this solution is suitable, they will help you make an application.
Once a Debt Relief Order is agreed upon, all future payments to your creditors and any interest or charges involved will stop for 12 months. If your circumstances haven’t changed after this period, the debt is completely written off.
Benefits and Considerations of a Debt Relief Order (DRO)
Benefits of a Debt Relief Order
- A Debt Relief Order typically lasts twelve months
- Debt Relief Orders don’t require you to make payments into them
- Creditors are stopped from taking any further action against you and all interest and charges associated will be cancelled
- A Debt Relief Order is relatively simple process to start and can be done through various charity organisations
- There is no fee to apply for a Debt Relief Order
Considerations of a Debt Relief Order
- Your credit rating will be affected for six years
- Owning your own property or having assets over £2,000 will stop you from entering into a Debt Relief Order
- A Debt Relief Order may be cancelled if your circumstances change during the the 12 month period
- Entering into a DRO will be recorded on a public register
- If you can afford more than £75 after your monthly essentials have been budgeted for then you will not qualify
DRO Eligibility
If you meet the following criteria, you may be eligible to apply for a DRO:
- You’re unable to pay your debts
- Your qualifying debts total less than £50,000
- You have no more than £75 left over each month after you’ve paid your usual household expenses
- you don’t own your home
- Other savings or assets you own are worth no more than £2,000 for items like jewellery or up to £4,000 for vehicles (certain assets are ignored when working out the value, e.g. basic household items and tools needed for your work)
- It’s been at least 6 years since your last DRO was made, except in cases where a DRO has been revoked
- You aren’t applying for or going through another formal insolvency procedure such as bankruptcy or an individual voluntary arrangement (IVA)
- You must have lived, had a property, or worked in England or Wales in the last three years
Your debt advisor will go through the qualifying criteria with you to help you assess whether this solution would work for you.
Debt Relief Order FAQs:
Applying for a DRO is free and no other fees are involved.
Debts that can be included in a DRO include, but are not limited to the following:
- Credit cards, overdrafts & loans
- Rent, utility bills, telephone bills, council tax and income tax arrears
- Benefits overpayments
- Hire purchase or conditional sale agreements
- Buy now, pay later (BNPL) agreements
- Other bills arrears e.g. for services like vets or solicitors
- Debts owed to friends and family
- Business debts
Entering into a DRO will impact your credit rating for 6 years and will be recorded on the public insolvency register.
When the DRO ends, your credit file will be updated to show that you have been discharged from the DRO period. If your credit file has not been updated to reflect this, you’ll need to contact the credit reference agencies. All accounts that were included in your DRO should be marked as ‘satisfied’ or ‘partially settled’ after the period.
So unless you have outstanding credit issues after the DRO is completed, your credit rating should be clean. The only creditors that will know that you had a DRO after the six-year point are those included in the arrangement who might have kept it on their internal records.
A DRO can be cancelled under certain circumstances, such as if your financial situation changes.
Your debt advisor or insolvency practitioner will be able to help if your circumstances change, for better or worse. There are a few options available depending on your circumstances, and you may be able to extend or cancel your DRO if necessary.
As with many other formal debt solutions, you can’t borrow £500 or more without telling the creditor that you have a DRO. This can make it difficult to borrow money to pay for things during your DRO.
You’ll need to speak to an approved debt advisor or insolvency practitioner to process an application for a debt relief order. They will make sure you meet the eligibility criteria and assess whether this solution is right for you, which may include calculating your total debt, looking at payments made to creditors over the last 2 years and finding out how much money you typically have left over at the end of each month.
If they determine that you are eligible, your adviser will complete an online application for you which is then submitted to the Insolvency Service to be issued or declined.
After the usual 12-month period, your circumstances will be evaluated to work out the next steps for dealing with the debt. If your situation remains the same or has worsened, then the debt included in your DRO will usually be written off completely.
Other Debt Solutions
Debts we can help with
We can help with unsecured debts including the below and more
Council Tax Arrears, HMRC debt & benefits overpayment
Payday loans, bank loans & overdrafts
Credit cards, store cards & catalogues
Bailiff Enforcement & Debt Collector Action
County Court Judgments (CCJs) & Attachment of Earnings
Creditors we deal with
We deal with all major creditors in the UK
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Service you can trust
We pride ourselves on delivering the highest level of service to help people find a solution to overcome problem debt.
Read real reviews of our service on Trustpilot.
Start your journey today and see which solution suits your needs.
Speak to a debt help expert now on 0161 823 4974 or complete the form and we will call you back.
They helped us immensely throughly would absolutely recommend them.
C Garrard, Trustpilot 5*
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Free debt counselling, debt adjusting and providing of credit information services is available. You can find out more by contacting Money Helper.
Free debt counselling, debt adjusting and providing of credit information services is available. You can find out more by contacting Money Helper.