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Understanding Debt Relief Orders

If you have found yourself in the position of struggling with personal debt you may have more than one option available. For many people, one very useful option is that of taking out a Debt Relief Order (DRO). Here we take a look at what a DRO is and if you are eligible to apply for one.

What is a Debt Relief Order?

Is Debt Relief Order is an order granted by the Insolvency Service to people who are unable to pay their personal debts of £15,000 or less, and also have a low income. The DRO normally lasts for one year and during that period of time your creditors are not allowed to take any action against you to recover the debt. At the end of this 12 month period you will normally be free of all the debts you have listed on your application.

What debts are covered with a DRO?

One of the reasons taking out a DRO can be very useful is that the majority of credit and loan agreements are considered qualifying debts. Debts that can be included in an application for a DRO include:

  • Credit card debt
  • Personal loans
  • Overdrafts
  • Hire purchase agreements
  • Rent arrears
  • Debts from utilities such as gas, electric and water
  • Council tax

However, not all debts are covered by a DRO such as child support, court fines and confiscation orders, student loans and social fund loans.

Who can apply?

Anyone who has lived, owned a property or run a business in England or Wales in the last three years can apply for a DRO as long as their qualifying debts are £15,000 or less. You must also have available income of no more than £50 a month after paying your household bills. You are only allowed to have assets and savings up to a maximum of £300, however your motor vehicle may be worth up to £1000, or more if it has been adapted for a disability.

Who can’t get a DRO?

You cannot apply for a DRO if you are currently bankrupt, have, or are in the process of applying for an Individual Voluntary Arrangement (IVA). If one of your creditors as applied to make you bankrupt; if you have applied for bankruptcy yourself or if you have received a Bankruptcy Restrictions Order you will be ineligible to apply for a DRO. You also must not have received a DRO in the last six years.

How to apply

In order to apply for a DRO you should contact professional debt advisers such as ourselves at Dissolve Debt who will make sure it is the best possible solution and refer you to one of our trusted 3rd parties. It is not possible to apply for a Debt Relief Order on your own; expert debt advisers will check your eligibility and complete all of the necessary forms to give you the best possible chance of the order being granted. The process is not as complex as bankruptcy or IVAs and once granted you will no longer have to make payments to the named creditors.

For further advice, contact Dissolve Debt today on 0800 0122 111 or through the contact form on our website.

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