A DRO (Debt Relief Order) is a formal insolvency process for people who cannot pay their debts and who have no assets, a low income with no other access to debt relief and no prospect of the situation improving.
- If you live in England or Wales you may be eligible if you owe less than £50,000 and have less than £2,000 in assets (and a car worth no more than £4,000). You must also have less than £75 in surplus income per month.
DROs are an alternative debt solution to Bankruptcy and usually last one year (12 months). Once you are in a DRO creditors are unable to recover their money without permission from the courts.
Once discharged from your DRO, all of the debts listed in your DRO will be cleared.
Fees
Debt Relief Orders are available through a limited number of approved intermediaries such as the Citizen’s Advice Bureau and there is no fee to apply.
Disadvantages of a DRO
- DROs will stay on public record for 15 months and on your credit record for six years
- You’ll be expected to pay back creditors if your financial situation improves
- You can’t get credit over £500 without telling the lender you have a DRO
- You may have difficulty opening a bank account once you have a DRO
Advantages of a DRO
- DROs usually last one year (12 months)
- At the end of your DRO your debts will be written off
- DROs are a low cost alternative to bankruptcy
- Your creditors can’t take any action over the money you owe