Debt relief order – how it works

If you owe less than £20,000, do not own your own home and have little spare income then a Debt Relief Order (DRO) is one way to deal with debt.

If you get a DRO: 

  • After 12 months your debts are  usually discharged
  • your creditors cannot recover their money without the court permission

How do I get a Debt Relief Order?

DRO’s are issued by an officer of the bankruptcy court-the official receiver. You have to apply to an unauthorised adviser will help you fill out the paperwork. 

What is the cost of a Debt Relief Order?

The fee charged by the official receiver is £90.

 Am I eligible for a Debt Relief Order?

Five criteria must all be met

  • Your debt is less than £20,000
  • You have less than £1000 worth of assets
  • You have lived or worked in England and Wales within the last three years
  • You have not applied for a DRO within the last six years
  • You have less than £50 a month spare income

 Restrictions

If you get a DRO then you must follow these court rules that are called “restrictions”.

 You cannot:

  • Manager a business without telling those you do business with about your DRO
  • Act as director of the company
  • Borrow more than £500 without telling the lender about your DRO
  • Create, manage or promote a company without the court’s permission.

If you want to open a bank account you should tell the bank or building society about your DRO.

How long do these restrictions last?

Typically 12 months. If careless or dishonest behaviour caused your debt problem these can be extended. The official receiver will inform you should an extension be required.

What about my bills?

While you have a DRO you must still pay:

  • Court fines
  • Student loans
  • Your rent and bills

What happens if I get into more debt?

If you get into more debt when you have a DRO you could get a bankruptcy order stop, also, you could be prosecuted if you fail to inform your new creditors about your DRO.

Will a DRO affect my credit record?

The DRO is added to the individual insolvency register. It is typically removed three months after the DRO ends.

The relief order will stay on your credit record for six years so it will affect your credit.

A DRO is one of several ways you can deal with excessive debt. Other methods include debt management and an IVA (individual voluntary arrangement). If you would like to speak to an advisor to learn more about your situation and the most suitable way forwards please reach out.

Additional reading on a DRO can be found here.

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