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Debt Relief Order (DRO)

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A debt relief order (DRO) is a way for you to have your debts written off if you do not own your home, have few assets and little available income to pay your creditors. If your DRO application is successful, most creditors cannot take action to recover your debts for 12 months. Debts are then written off after the 12 months.

You can only apply for a DRO through an ‘approved intermediary’.

The approved intermediary will make a DRO application to the official receiver’s office through a special on-line system. There is no court hearing.

To qualify for a DRO you must:

  • be unable to pay your debts
  • have total debts under £20,000 at the date the application is approved by the official receiver
  • have assets below £1000
  • not have a car or motor bike worth more than £1,000
  • have less than £50 a month spare income after normal household expenses are taken into account
  • live in England or Wales (or have lived or run a business in England or Wales in the last three years)
  • not have had a DRO in the last six years

You can include most types of debt in your application as long as your total debts are less than the £20,000 limit.

Debts you can include:

  • rent arrears
  • gas and electricity debts with your current supplier
  • arrears on your phone bill if you need to keep it as an essential service
  • council tax, business rates and community charge arrears
  • income tax, VAT and National Insurance arrears
  • water arrears 
  • credit cards and store cards 
  • bank overdrafts and bank loans
  • loans to finance companies
  • catalogues
  • home-collected credit
  • benefit overpayments
  • family or personal debts
  • hire-purchase and conditional-sale agreements if you are in arrears (if you are not in arrears you may be able to exclude this type of debt in certain circumstances)
  • hire agreements
  • parking penalty charges
  • mortgage shortfalls (money you owe if your house was sold for less than the outstanding mortgage)

You cannot include the following debts in a DRO:

  • magistrates’ court fines
  • maintenance, Child Support Agency (CSA) and Child Maintenance Service (CMS) payments and arrears
  • student loans
  • budgeting loans and crisis loans
  • money owed under a ‘criminal confiscation order’ 
  • debts resulting from certain personal injury claims against you

You will need to make sure you pay ongoing payments on debts not included in the DRO. 

The fee for a DRO is £90.  There is no reduction if you are on benefits or a low income but you are allowed to pay in instalments.  If you cannot pay the fee, you might be able to apply to a charity for help. The IMA have published a list of charities that can help with DRO fees. 

If your DRO application is approved certain restrictions will be placed on you for 12 months from when the DRO is approved. The DRO will be recorded on your credit reference file and the DRO will be recorded on a public register called the ‘Individual Insolvency Register’. Credit reference agencies keep information on DRO’s for six years.

You can find a debt advice provider to help you with a DRO application on DebtHelpCompare.com