What is a Debt Relief Order (DRO)?
A Debt Relief Order (DRO) provides relief from debt (subject to some exceptions). DRO’s are a potential debt solution for those with limited disposable income each month and few or no assets. It will stop all debt repayments and interest on your debts for 12 months. If your finances have not improved after this period, your debts will be written off.
DROs do not involve the courts. They are made under a partnership between the Insolvency Service and skilled debt advisers, called approved intermediaries, who will help you apply to the Insolvency Service for a DRO.
To apply for a DRO, you must meet certain conditions:
- You must be unable to pay your debts
- DROs are not available in Scotland and they are only available to people who owe less than £30,000, or less than £20,000 in Northern Ireland
- You can own a car to the value of £1,000 but the total value of other assets must not exceed £1,000 (items such as clothing, furniture and tools for use in employment or a business may be disregarded)
- After taking away tax, national insurance contributions and normal household expenses, your disposable income must be no more than £50 a month
- You must either be currently living in Northern Ireland, or have been living or carrying on business in Northern Ireland at some time within the last three years
- You must not have been subject to another DRO within the last six years
- You must not be involved in another formal insolvency procedure at the time you apply
- You must pay £90 to apply for a DRO, which is non-refundable
- DROs negatively impact your credit file and are visible on a public register
How much will I pay?
A Debt Relief Order carries a one-off fee to the Insolvency Service of £90. You can pay this in installments over a period of six months if need be.
Advantages of debt relief order
- Your debts are written off when you have finished your Debt Relief Order (with exceptions – see disadvantages).
- Your creditors cannot take any further action against you without permission from the court.
- It can be considered as a fresh start with your finances.
- There is only a one-off fee of £90 which can be paid in installments before the application is made if need be.
- You get to keep a vehicle (up to the value of £1,000).
Disadvantages of a debt relief order
- Your details will be placed on a public register.
- If you have had a Debt Relief Order in the past 6 years, are bankrupt, in an IVA, or are subject to Bankruptcy restrictions, then you cannot do a Debt Relief Order.
- If you are a homeowner you cannot do a Debt Relief Order.
- Student loans, fines and some other debts cannot be included in a Debt Relief Order.
- Your employment could be affected.
- You must cooperate with your Official Receiver during the Debt Relief Order or it could be revoked.
- You cannot act as a director of a company or be involved in the management unless the court agrees to it.
- It is an offence to obtain credit of more than £500 or more without disclosing that you are in a Debt Relief Order.
- You could have a Debt Relief Restrictions order made against you for anything from 2 – 15 years if you are found to have acted irresponsibly, recklessly or dishonestly.
In this section you’ll find advice about:
We work closely with several local debt charities including adviceni.com and ruralsupport.org.uk providing training and support. Linda Wilson, our Voluntary Sector Services Manager, works closely to ensure that our services are accessible to those most in need.