A Debt Relief Order (DRO) is a formal insolvency process that can help you deal with your debts if you owe less than £50,000, don’t own your home, and have less than £75 disposable income.
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A Debt Relief Order, or DRO, is a formal legally binding debt solution and is most suited for those who own little assets of value and have a low level of income. It is sometimes viewed as an alternative to Bankruptcy or IVA but the strict criteria can be difficult to meet.
You must have unsecured debt of less than £50,000, not a homeowner, and very few assets to be eligible. A DRO is available in England, Wales, and Northern Ireland. In Northern Ireland, the criteria is different to England and Wales. You must have unsecured debts of less than £20,000, not be a homeowner, have very few assets and have a car valued at less than £1,000. Your disposable income must be less than £50. Scottish residents have a similar option available to them, known as a Minimal Asset Process (MAP). After the fixed period, usually, 1-year, qualifying debt will be wiped away, giving you a fresh start.
Before you apply for any debt solution you should consider the advantages and disadvantages of the solution and how these may impact you. Our experts will be more than happy to walk you through these and explain them in detail.
Some debts can’t be included in a DRO, such as court orders permitting child support, child maintenance, court fines, or student loans. If you are having trouble making payments to any of these, they must be dealt with separately.
If any debts have amounted due to fraud, these can’t be included and will still have to be paid once the DRO has finished.
If you have decided that a DRO is the right option for you, we will put you in contact with a professional insolvency practitioner, should you need further help or advice with the mediation process, we’ll be right here to help.
You’re only able to apply for a DRO once every six years. It’s important that the information you provide on your application is accurate.
Once you have submitted your application, the Debt Relief Order will be granted by an Official Receiver if you’re eligible.
Most DROs will include a ‘windfall clause’, which means that if you come into any money during the course of your DRO, you will have to declare it to your insolvency practitioner as a source of income. These windfalls can include things like a pay increase at work. If you’re lucky enough to win the lottery or unfortunate enough to lose a family member, any winnings or inheritance could be given to your debt holders as part of this windfall clause.
Homeowners are not eligible for a Debt Relief Order. If you are a homeowner and you’re struggling with debt, we recommend speaking to one of our advisors to see what alternative options are available to you.
If after reading this, you think that a Debt Relief Order would be the right solution for you, contact us to discuss this solution in more detail.
Our expert advisers will give you advice and provide you with all the relevant information needed for you to make a decision that’s best for your situation.
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