Debt Relief Order

In debt solution terms, the Debt Relief Order, or DRO, is the new kid on the block.

It was introduced in UK law in 2009 to provide a cheaper formal alternative debt solution to bankruptcy, for those people who are experiencing difficulties repaying their unsecured debts.

Qualifying Criteria

The DRO is only available to a very narrow band of individuals.

They must have been living in England, Wales or Northern Ireland for the last 3 years. They must also have debt levels under £20,000 for those living in England and Wales or under £15,000 for those living in Northern Ireland.

They must be struggling to afford their debt repayments to the point where they cannot afford more than £50 towards the monthly repayment of their debts.

They must also have no assets of higher value than £1,000 for those living in England and Wales, or £300 for those living in Northern Ireland, with the exception of a motor vehicle, which must be less than £1,000 in value.

DRO advantages

A DRO is a total debt solution, which means it will remove the debt burden permanently. And it does this for a fraction of the costs of bankruptcy.

There are no repayments to be made with a DRO. Once the £90 fees have been paid to the intermediary the ongoing liability to the debts in the DRO are removed.

On successful completion of 12 month DRO term, all debts are written-off and the debtor is legally debt free.

DRO disadvantages

The main downside to a DRO is the damage caused to the debtor's credit rating. As with all debt solutions, the damage lasts for 6 years and during this time it will be very difficult for the debtor to obtain further credit.

Also, similar to bankruptcy, creditors do have a right of redress if they feel an application is fraudulent or if a windfall is received during the DRO.

For more information on the bankruptcy solution read -

We use cookies to ensure that we give you the best experience on our website. You can view what cookies we use and change your cookie settings at any time by following the instructions here.
We will assume based on your 'implied consent' that if you continue to use our website without changing your settings you are happy for us to use cookies.