Debt Relief Order.

Debt Relief Orders (DROs) are one way to deal with your debts if you owe less than £30,000, do not have much spare income and do not own your home.

If you get one:

your creditors cannot recover their money without the court’s permission

you’re usually freed (‘discharged’) from your debts after 12 months

Get a Debt Relief Order

You get a DRO from the official receiver, an officer of the bankruptcy court, but you must apply through an authorised debt adviser.

They’ll help you fill in the paperwork.

Costs

The official receiver’s fee is £90. Your debt adviser can tell you how and when to pay it. In some cases a charity may be able to help you with the cost - ask your debt adviser.

Eligibility

You’re generally eligible if you meet all of these criteria:

you owe less than £30,000

you’ve less than £75 a month spare income

you’ve less than £2,000 worth of assets

you do not own a vehicle worth £2,000 or more

you’ve lived or worked in England and Wales within the last 3 years

you have not applied for a DRO within the last 6 years

Restrictions

You must follow rules called ‘restrictions’ if you get a DRO.

This means you cannot:

borrow more than £500 without telling the lender about your DRO

act as the director of a company

create, manage or promote a company without the court’s permission

manage a business without telling those you do business with about your DRO

If you want to open a bank account, you may also have to tell the bank or building society about your DRO.

Check the Individual Insolvency Register to see when the restrictions end.

The restrictions usually last 12 months. They can be extended if careless or dishonest behaviour caused your debt problem. For example, you lied to get credit.

The official receiver will tell you if they should be extended. To extend them, you’ll be asked to agree to a ‘Debt Relief Restrictions Undertaking’. The court can issue a ‘Debt Relief Restrictions Order’ if you do not agree.

What you need to know

While you have a DRO you still have to pay:

your rent and bills

certain debts, for example student loans, court fines

DROs can be cancelled if:

your finances dramatically improve

you do not co-operate with the official receiver - for example you do not give them the information they ask for

If you get new debt after your DRO is approved you could:

get a bankruptcy order

be prosecuted if you do not tell new creditors about your DRO

Your DRO is added to the Individual Insolvency Register - it’s removed 3 months after the DRO ends.

Your DRO will stay on your credit record for 6 years.