What is a debt relief order (DRO)?
DROs provide debt relief if you have debts which do not exceed £15,000 which you are unable to pay, subject to some restrictions.
Who might DROs be suitable for?
They are suitable for people who do not own their own home, do not have disposable income exceeding £50pcm and do not have assets exceeding £300 (you may own a car if the value does not exceed £1000). You must not have been subject to another DRO within the last 6 years and you must not be involved in another formal insolvency procedure at the time you apply.
How long do they last?
An order lasts for 12 months, known as the moratorium period. In that time you will not pay anything and the creditors named in the order cannot take any action to recover their money without permission from the court. At the end of the period, if your circumstances have not changed you will be freed from the debts that were included in your order. If your financial circumstances improve during this period the DRO may be revoked. After 12 months the total debt will be automatically written off.
DROs do not involve the courts. They are run by The Insolvency Service in partnership with skilled debt advisers, called approved intermediaries, who will help you apply to The Insolvency Service for a DRO.
What debts may be included?
Qualifying debts which may be included are: rent arrears, council tax arrears loans & overdrafts, DWP debts, parking fines, housing benefit overpayments, utility arrears.
The following are NOT qualifying debts: Magistrates Court fines, student loans, child support arrears, obligations under a criminal confiscation order.