What is a Debt Relief Order?
A Debt Relief Order (DRO) is, for some, an alternative to Bankruptcy provided that you meet certain strict criteria. It may sound strange but, Bankruptcy can be an expensive process to get into, especially when compared to a DRO. Currently it costs £680 to apply for Bankruptcy in England and Wales compared to £90 to apply for a DRO.
Who can benefit from a Debt Relief Order?
DROs are only available if you meet certain strict criteria: –
• You must have been living or carrying on business in England, Wales or Northern Ireland within the last three years
• You must not own your own home
• Your total assets (not including a car) must be less than £1,000
• If you do own a car, it must be worth less than £1,000 (unless it is a vehicle of trade or vehicle for a disability)
• Your monthly surplus income (after taking off all your living costs) must be no more than £50
• Your total debts must be less than £20,000
• You must not have applied for a DRO within the last six years
• You must not be currently subject to any other formal insolvency procedure i.e. bankrupt or in an IVA
How does a Debt Relief Order work?
A DRO freezes your debt repayments and interest for one year – meaning that you do not have to make any payments and, if your financial position has not improved by the end of the twelve months then all your debts as listed in your DRO are written off.
During the one-year period your creditors are unable to take any enforcement action against you to recover the amounts which they are owed.
Whilst a DRO is an alternative to bankruptcy, it is a similar formal insolvency process for dealing with your debts.
If at any point during the one year your financial circumstances change and you no longer meet the DRO criteria, then you must inform the Official Receiver immediately.
Interested? Get in touch today!
So, you are interested in a DRO and you think that it might be the right option for you.
DROs are run by the Insolvency Services. We can, assist you in applying to the Insolvency Service for a DRO. You can find some useful information on the process and what you need to do by visiting the Money Advice Service, which provides free and impartial advice, set up by the government – you can find their website by clicking the link Money Advice Service. Or alternatively, you can get in touch with us by email or our freephone number 0808 164 3750.
If you are unsure whether a DRO is right for you or whether you meet the strict criteria, if you use our Save Me request form, this will allow us to give you best advice, by phone at a convenient time for you.
Alternatively, you can give us a call on 0808 164 3750 (Freephone) and we will be happy to have a chat with you.