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Debt relief order

What is a Debt Relief Order (DRO)?
A debt relief order is another method of dealing with personal debts that you are struggling to repay.

A DRO usually lasts for a year, providing you with a breathing space during which your creditors are barred from taking legal action against you for repayment of the debt. At the end of the year, you will be free of all the debts listed in the DRO.

Often regarded as a low-cost alternative to bankruptcy you aren’t required to pay anything towards your debts for 12 months, and after that time they are written off. Although A DRO is a formal debt solution, you don’t need to appear in court. You must have less than £50 in surplus income per month.

In order to put a DRO in place, you will need to work with an approved adviser, and we can act in this capacity on your behalf.

Am I eligible for a DRO?
If you aren’t going through any other formal insolvency procedure, such as bankruptcy, or Individual Voluntary Arrangement (IVA), then a DRO might be an option for you.

In order to qualify you will have:

  • debts of up to £20,000,
  • you don’t own a home
  • the value of the things you own, your assets, is less than £1,000,
  • you don’t have a car worth more than £1,000
  • have less than £50 left at the end of the month

In these circumstances, a DRO may be a suitable route for you.

How does a DRO differ from an IVA?
A DRO and an IVA both have the same outcome – the debtor becomes free of their unsecured debts covered in the agreement at the end of the stipulated time period, 12 months in the case of a DRO and five years in the case of an IVA.

However, there are differences. A DRO is not suitable for homeowners, whereas an IVA is. Those using a DRO can still obtain credit up to £500; this is not allowed under an IVA.

Those on a DRO are not required to make repayments, whereas those with an IVA are required to make monthly payment of a minimum of £200.

An IVA will show on the debtor’s credit record for one year after the five year completion period. By contrast, under a DRO the process will remain on credit records for six years.

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Key Contact

Brian Johnson


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