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What Is A Debt Relief Order

What Is A Debt Relief Order

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Debt Relief Orders (DRO) are a possible solution to your debt problems. They act as a legal respite from the burden of your debts – it effectively means you are relieved of making payments towards your debts, and protected from being pursued by your creditors. At the end of the DRO period (which is usually one year) the debts covered by it will usually be written off.

How do You Apply for a DRO?

To apply for a DRO you have to go through an approved intermediary – otherwise known as a DRO advisor. You can find one at your local Citizen’s Advice Bureau. You are not allowed to make an independent application. There is an application fee of £90 with which, if you cannot afford it, you may be able to get assistance from a local charity. The charity Turn2Us is one such organisation that may be able to help.


DROs are not automatically available to everyone, and the criteria for award are comprehensive. In most cases you will be expected to meet all to the following criteria in order for your application to be successful, and even then it may be refused on other grounds:

  • You have debts worth up to, but not more than, £15,000
  • You are unable to pay them
  • Your disposable income each month after normal household outgoings is less than £50
  • You are not a homeowner
  • The value of any savings or assets you have is less than £300
  • You are not the owner of a car worth £1000 or more (unless it is specially adapted for disability)
  • You have been resident, a homeowner, or employee in England or Wales at some point during the last 3 years
  • You have not had a DRO in the last 6 years and are not currently the subject of some other debt relief process such as an Individual Voluntary Arrangement (IVA) or bankruptcy

Your Recent Actions

What Is A Debt Relief OrderWhen allocating DROs the experts appreciate that some individuals may actively work towards meeting the eligibility criteria when in reality they do not. So, they will assess whether in the last 2 years you have given away any belongings, sold assets for significantly less than their true values, or prioritised repayment of certain debts over others. All the facts and your personal circumstances will be taken into consideration before any DRO is awarded or refused.

Qualifying Debts

Only certain types of debt qualify to be covered under a DRO. These are as follows and must not have been obtained by fraudulent means. Rent arrears may also have to be continued to be repaid after the DRO period has expired:

  • Loans, credit cards and overdrafts
  • Benefits overpayments
  • Business Debts
  • Buy-Now-Pay-Later arrangements
  • HP or conditional sale contracts
  • Utility, telephone, council tax, incomes tax and rent arrears

Debts that do NOT qualify include:

Is DRO a Good Option for You?

A DRO can be a useful way to pull yourself out of debt, but it will have an effect on your credit rating for 6 years. It can also mean that items bought on HP have to be given back. DROs also come with certain restrictions on for those wishing to set up or run a new business, as there are permissions that may need to be obtained and obligations to disclose the DRO to those your are trading with. Your details will also appear on the Insolvency Register, which is in the public domain.

If, taking all of the above into consideration, you feel that a DRO could help you, then visit your CAB and ask to discuss your options with a DRO advisor.



About Cally Worden

About Cally Worden

Seasoned freelance writer Cally Worden lives with her family and dog in a quiet corner of rural France. A love of the outdoors, and a fascination with her children's ability to view life with fresh eyes provide the inspiration for much of her work. Cally writes regularly for various websites and UK print publications on subjects as diverse as parenting, whatsapp plus,travel, lifestyle, and business, and anything that makes her smile.

Website: Cally Worden

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