Debt Relief Order (DRO)
A Debt Relief Order (DRO) is a legal process that can help you if you’re struggling to repay your debts. It’s an alternative to bankruptcy and can help you to get a fresh start.
Do I Qualify
For an IVA?
Debt Relief Order (DRO)
A Debt Relief Order (DRO) is a legal process that can help you if you’re struggling to repay your debts. It’s an alternative to bankruptcy and can help you to get a fresh start.
Do I Qualify
For an IVA?
How does a debt relief order (DRO) work?
A DRO is a legally binding agreement that allows you to effectively write off your debts to be paused for a 12 month period.
It’s available to anyone who has debts below £30,000 and owns fewer than £2,000 worth of assets.
During the 12-month period following your DRO application your creditors can’t take action against you to recover the money you owe. This gives you time and space to get your finances back on track and start rebuilding your credit history.
If your circumstances remain the same for the next 12 months, then any debt entered into the debt relief order application will be written off.
One of our friendly debt specialists will go through a financial assessment with you, gathering all the information such as normal household expenses that are required to determine your eligibility for a debt relief order.
Your assessment will take into account your debts, assets and income, as well as any other relevant factors that may affect your ability to repay your debts.
After the financial assessment, it is deemed you are eligible, you can then complete and submit your application for a debt relief order.
Your application is then sent to the insolvency service where an official receiver will review your case and determine whether to approve your application for a debt relief order.
The cost of applying for a debt relief order is £90. This can be paid in one transaction or made in instalments.
It is important to note that you do not receive your application fee back if the DRO does not get approved by the official receiver, so ensure you are eligible before proceeding to make payment.
If your application is approved, your debts will be paused for one year. If your circumstances do not change during that period, your debts will be written off.
If your circumstances improve, however, you may no longer be eligible for a DRO and the solution will be cancelled.
If this is the case, no debt is written off and your creditors will once again be able to start taking action to recover the money you owe.
How does a debt relief order (DRO) work?
A DRO is a legally binding agreement that allows you to effectively write off your debts to be paused for a 12 month period.
It’s available to anyone who has debts below £30,000 and owns fewer than £2,000 worth of assets.
During the 12-month period following your DRO application your creditors can’t take action against you to recover the money you owe. This gives you time and space to get your finances back on track and start rebuilding your credit history.
If your circumstances remain the same for the next 12 months, then any debt entered into the debt relief order application will be written off.
One of our friendly debt specialists will go through a financial assessment with you, gathering all the information such as normal household expenses that are required to determine your eligibility for a debt relief order.
Your assessment will take into account your debts, assets and income, as well as any other relevant factors that may affect your ability to repay your debts.
After the financial assessment, it is deemed you are eligible, you can then complete and submit your application for a debt relief order.
Your application is then sent to the insolvency service where an official receiver will review your case and determine whether to approve your application for a debt relief order.
The cost of applying for a debt relief order is £90. This can be paid in one transaction or made in instalments.
It is important to note that you do not receive your application fee back if the DRO does not get approved by the official receiver, so ensure you are eligible before proceeding to make payment.
If your application is approved, your debts will be paused for one year. If your circumstances do not change during that period, your debts will be written off.
If your circumstances improve, however, you may no longer be eligible for a DRO and the solution will be cancelled.
If this is the case, no debt is written off and your creditors will once again be able to start taking action to recover the money you owe.
Which debts can be written off with a DRO?
Debts that can written off in a DRO:
- Utility bills such as gas, electricity and water bills
- Credit cards & loans
- Benefit overpayments
- Hire purchase (HP) agreements
- Items bought on finance, such as buy-now-pay-later agreements
Debt that can't be written off in a DRO:
- CSA maintenance arrears
- Student Loans
- TV licence arrears
- Social fund loans
If you are unsure if a debt can be included in your DRO, our advisors will be more than happy to help.
Which debts can be written off with a DRO?
Debts that can written off in a DRO:
- Utility bills such as gas, electricity and water bills
- Credit cards & loans
- Benefit overpayments
- Hire purchase (HP) agreements
- Items bought on finance, such as buy-now-pay-later agreements
Debt that can't be written off in a DRO:
- CSA maintenance arrears
- Student Loans
- TV licence arrears
- Social fund loans
If you are unsure if a debt can be included in your DRO, our advisors will be more than happy to help.
How do debt relief orders affect you?
A debt relief order offers a powerful legal solution for dealing with unmanageable debts. However, the debt solution does have some restrictions that require consideration before you apply.
How do debt relief orders affect you?
A debt relief order offers a powerful legal solution for dealing with unmanageable debts. However, the debt solution does have some restrictions that require consideration before you apply.
Positives and negatives of a debt relief order (DRO)
DRO Advantages
- Low cost alternative to bankruptcy
- Low cost alternative to bankruptcy
- Low cost alternative to bankruptcy
DRO Disadvantages
- Strict eligibility criteria, only available to those with few assets and a low income
- If your situation improves, the DRO is cancelled and you continue to owe the money in full
- It negatively impacts your credit file
- You are placed on the individual insolvency register and publicly listed as bankrupt
Get Free Debt Advice
Positives and negatives of a debt relief order (DRO)
DRO Advantages
- Low cost alternative to bankruptcy
- Low cost alternative to bankruptcy
- Low cost alternative to bankruptcy
DRO Disadvantages
- Strict eligibility criteria, only available to those with few assets and a low income
- If your situation improves, the DRO is cancelled and you continue to owe the money in full
- It negatively impacts your credit file
- You are placed on the individual insolvency register and publicly listed as bankrupt
Get Free Debt Advice
Is a debt relief order a good idea?
If you are struggling with unmanageable debts and have no assets to be realised, then a debt relief order may be a good option for you.
It is a low-cost solution that can help provide some temporary relief from creditor pressure while giving you time to get your finances back on track.
Debt relief orders however can be cancelled if your circumstances improve during the 12-month period, which could see you back to where you started.
Speaking to a debt specialist will help you understand all of the debt solutions available to you and the advantages and disadvantages of each.
Is a debt relief order right for me?
If you have a debt problem and are unsure whether a debt relief order is the right solution for you, it is best to speak to one of our debt specialists.
This will ensure you are fully informed of all the debt help that is available to you, and the advantages and disadvantages of each option.
Solutions such as an Individual Voluntary Arrangement (IVA) or a Debt Management Plan (DMP) could be better suited to your personal circumstances.
Whatever option you choose, the most important thing is that you take action to tackle your debt problem as soon as possible. With the right support and advice, there is hope for a brighter financial future ahead.
Access a PennyPlan today
100% FREE ADVICE
Get information today on your available options
Take the first steps to becoming Debt Free!
- One lower monthly payment
- Write off 75%* of unaffordable debt
- Freeze interest & charges
- Stop legal action including bailiffs
- Receive FREE well-being sessions
100% FREE ADVICE
Get information today on your available options
Take the first steps to becoming Debt Free!
- One lower monthly payment
- Write off 75%* of unaffordable debt
- Freeze interest & charges
- Stop legal action including bailiffs
- Receive FREE well-being sessions