What Is A Debt Relief Order (DRO)?
A debt relief order is a type of insolvency which assists in your writing off debt, which you are not in a position to repay within the required deadline.
This debt relief order (DRO) is available in England, Wales and Northern Ireland only. If you reside in Scotland, the option to apply for bankruptcy using the minimal asset process may be available to you.
MAP is a similar solution, with different associated benefits, fees and risks.
Am I eligible for a DRO?
You will need to satisfy the following criteria in order to apply for a DRO:
- You need to reside in England, Northern Ireland or Wales and have been involved in business transactions in the past three years in any of these countries
- Your debt accumulation should be less than £20,000
- You do not own a home
- Your asset worth totals less than £1,000 – you can however own a motor vehicle valued up to £1,000 in addition to this
- After payment of all your living costs, you have less than £50 per month remaining
How does a DRO work?
Application for a DRO must be submitted through one of the organisations that have been approved by the Insolvency Service. We are one such organisation.
Once your DRO has been approved, any payments on existing debts are suspended for 12 months, and no action can be taken by your creditors to collect these debts during this period of time. Interest and other charges will still be accumulated. If after the 12 month has ended, your circumstances remain the same, then all your debts that are included in the DRO will be written off.
If your DRO is cancelled (revoked) at any time during the 12 month period, your creditors are able to pursue the debt, along with any accrued interest and charges. At this time it would be prudent, to consider any other repayment options that may be available. If this occurs, we will assist you in determining what to do next.
How much does a DRO cost?
The cost of a DRO is £90. The fee should be paid directly to the Insolvency Service, and until the fee has been paid in completion, the application cannot be submitted.