WHAT IS A DRO?
A debt relief order (DRO) is a way to have your debts written off if you have a relatively low level of debt and have few assets. Debt relief orders are not available if you live in Scotland. In Scotland, a Minimal Assets Process (MAP) bankruptcy is a similar solution, but it’s important to note that it has different benefits, risks and fees associated with it.
IS A DRO SUITABLE FOR ME?
DROs are specifically designed for people with few assets and a relatively low level of debt. The criteria to be able to apply for a DRO is different depending on where you live:
If you live in England, Wales or Northern Ireland you may be eligible if you owe less than £20,000 and have less than £1,000 in assets (and a car worth no more than £1,000).
You must also have less than £50 in surplus income per month. A DRO can be a cheaper alternative to bankruptcy.
You can only apply for a DRO if you live in England, Wales or Northern Ireland. If you live in Scotland read our debt advice in Scotland page for more information on the solutions available to you.
A DRO freezes your debt repayments and interest for 12 months. If your financial situation hasn’t changed at the end of this period then your debts will be written off.
A DRO will cost £90. This is the amount charged by the Insolvency Service to process a DRO application. You can’t get any discounts or exemptions like you can with bankruptcy fees, so the full £90 needs to be paid before your application can be submitted.
The fee can be paid in one lump sum or in instalments over a 6 month period. Once your fee has been paid and your application is submitted you can’t get your money back, even if the DRO is rejected or revoked.
ADVANTAGES & DISADVANTAGES OF A DRO
- Quick process – 12 months
- Debtors cannot owe more than £20,000
- Protected from lenders – legally binding agreement which is designed to stop lenders contacting by phone or by letter and also any legal action so no bailiffs, CCJs, attachment of earnings and charging orders
- Affordable – £90 to Insolvency Service
- Restrictions are the same as bankruptcy
- Must not have had DRO in last 6 years
- Can’t apply if you are a homeowner or if your car is worth more than £1000 or if you have assets totalling more than £1000
- Credit rating affected – Credit file for 6 years from the making of the order
- Plan is income dependant – If debt level or Disposable income increases above the minimum level then the DRO will fail
- Not for debtors in Scotland