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Debt Relief Order - DRO

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Debt Relief Order

A Debt Relief Order, often known as a DRO is a fairly new debt solution that was designed by Government legislation to help people struggling with debt. 

DROs allow people struggling with debt to regain control and to become debt free in just 12 months and to write off their unsecured debt. 

Not everyone qualifies for a DRO as there is quite strict criteria but if you do, it could be a good way of finally resolving your debt. 

  • Write off debt100% of your unsecured debt
  • No monthly paymentsNothing to pay towards the debt included
  • Protection from creditorsLegally stopped from contacting you

How does a DRO work

Often known as ''Little Bankruptcy'', DROs have become increasingly popular over the last few years and have helped tens of thousands of people to resolve their debt.
No Monthly Repayments
If you are accepted onto a DRO then you are not expected to make any payments to the debt included in the DRO
Write Off All Unsecured Debt
All of the debt included in the DRO is completely written off after the 12 months. This means that you won't have to repay the debt.
Debt Free In 12 Months
Debt Relief Orders last for just 12 months. Once this period is over, the DRO ends and you are free from all of the debt included in it.
Legal Protection From Creditors
A DRO is a legal agreement, this means that your creditors can't contact you or chase you for payment during or after the DRO is completed

Example of Debt Relief Order

Everyones situation is unique and not everyone qualifies for a DRO. Below is an example of how a Debt Relief Order could work.

Before a Debt Relief Order:

Total Debt to Repay: £8,000
100%
Monthly Repayments: £150
100%
Time in debt: 66 months
100%
Debt written off: £0
1%

After a Debt Relief Order:

Total Debt to Repay: £0
1%
Monthly Repayments: £0
1%
Time in debt: 12 months
18%
Debt written off: £8000
100%

The downsides to a DRO

As with all debt solutions there are upsides and downsides. Not everyone qualifies for DROs and it can result in long term negative impacts.
Disposable Income Must be Under £50
You only qualify for a DRO if you have less than £50 left over at the end of the month after paying all of your essentials.
You can't be a homeowner
To qualify for a DRO you must not own a property or other similar assets. This applies to part ownership of property.
Assets must be under £1000
If you wish to be considered for a DRO you may not own items valued at more than £1000. This may include cars, computers or jewellery for example
Negative impact on your credit rating
A DRO will stay on your credit rating for 60 months. During this period it will be difficult to get any credit.
DROs are public
If you are accepted onto a Debt Relief Order then your name will be placed on a public register and this can stay on there for 6 years.
Online Application Fee
To apply for a Debt Relief Order you will need to be able to pay a £90 fee. DROs can only be applied for online.
Money Advice Service

To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.

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