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What is a debt relief order

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If you owe less than £15,000, don’t have much spare income and possess few assets then a Debt Relief Order (DRO) may be the right debt solution for you. A DRO means that you don’t need to make any payments to creditors listed in the order for the duration of the DRO period (usually one year). Your creditors can’t recover money from you without the court’s permission. At the end of the DRO period debts are usually written off and you’ll be free from owing the money.

Am I eligible?

To qualify for a DRO you must owe less than £15,000, have less than £50 in spare income each month and own less than £300 worth of assets. You must also have lived and/or worked in England, Wales or Northern Ireland within the last three years and must not have applied for a DRO within the previous six years.

How do I get one?

To get a DRO you must go through an approved intermediary (a specialist debt adviser). You can find one through the Citizens Advice Bureau or by looking on the Insolvency Service’s website. The adviser will help you find out if you’re eligible for a DRO and establish if a DRO is the right way forward for you. The application will be made by the adviser and sent to the official receiver who makes the decision.

What happens next?

debt relief orderIf your application is granted then the official receiver will write informing you that the DRO has been made. The letter will also set out any restrictions you’ll have to adhere to during the DRO period. A letter will also be sent to each of the creditors covered by the DRO and an entry will be made into the Electronic Individual Insolvency Register showing the DRO against your name.

How much does it cost?

You’ll have to pay a fee of £90 to apply for a DRO. This can be paid either in full or in instalments over a six-month period but your application won’t be processed until the full amount is paid. It’s important to work out if you’re eligible for a DRO before you pay the fee as you won’t get your money back if your application is turned down. If you can’t afford the charge then there are some charities and organisations that may be able to help with the cost.

Will it affect my future?

There are some restrictions you must follow if you get a DRO. These include not being able to borrow more than £500 without declaring your DRO to the lender. You will also not be allowed to act as the director of a company, create a new company without permission from the court or manage a company without telling them about your DRO. Restrictions are usually lifted after 12 months but they can be extended under certain circumstances.

A DRO will stay on your credit record for six years but it can be a cheaper alternative to bankruptcy.

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About Maria Brett

About Maria Brett

Maria is a freelance writer with over 10 years' experience producing content for a variety of publications and websites. When not working or looking after her two gorgeous sons, she can usually be found playing flugelhorn in a brass band, helping out at her local hospital radio station, shouting at the television while watching Formula 1, at the cinema or plonked on the couch with a cold glass of wine.

Website: Maria Brett

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