Debt Relief Order

A debt relief order is a way to deal with your debts

A debt relief order is a way to deal with your debts

Debt Relief Order

A debt relief order, or DRO for short, is a way to deal with your debts. It is a formal insolvency procedure and it may be suitable if you are struggling to repay your debts, do not own your home and have debts less than £30,000.

The DRO will provide you with legal protection from your creditors. This means that they will not be able to take any action against you to recover the debt you owe. If they have already started any kind of recovery action, then this has to be stopped.

In most cases, the DRO will come to an end after 12 months and you will be ‘freed’ from your debts.

There is a one-off fee of £90 that is paid to the Insolvency Service. There is no other cost or monthly payment that needs to be paid in a DRO.

Advantages of a DRO

  • Provides you with legal protection from your creditors.

  • A cheaper alternative to bankruptcy as a way to deal with your debts.

  • Debts included in the DRO are written-off after the successful completion of the DRO (usually 12 months).

Disadvantages of a DRO

  • Cannot apply if you are a homeowner or owe more than £30,000.
  • Details of your DRO will be public information listed on the insolvency register.
  • There is a one-off fee of £90 to pay.

  • The DRO will be recorded on your credit file for 6 years which will result in a poor credit score.

Whether a DRO is the best solution for you would depend on your circumstances and will require specialist debt advice. Speak to one of our debt counsellors by clicking on the link below.