A debt relief order is an alternative to bankruptcy for people struggling with debts of less than £20,000.
What is a debt relief order?
A debt relief order is only available to people who have a disposable income of less than £50 per month and personal assets worth less than £300. Motor vehicles worth less than £1,000 will generally not be included in this limit.
What debts count towards a debt relief order?
- Unsecured debt – Loans, credit cards, store cards, overdrafts, payday loans.
- Household debts – Rent, utilities, telephone, council tax.
- Finance – Hire purchase, credit agreements, buy now pay later agreements.
Who is a debt relief order suitable for?
Individuals with relatively low liabilities, small surplus income and few or no assets and who are possibly not in a position to pay off their debts in a reasonable time.
What are the criteria for a Debt Relief Order?
It costs £90 to arrange a Debt Relief Order and you can pay in installments over 6 months. However, you need to have paid the fee in full before your application will be looked at. To qualify for a Debt Relief Order, you need to meet the following criteria:
- Your disposable income must be £50 or less.
- You have less than £300 in assets and your car is worth no more than £1,000.
- Your debt totals less than £15,000.
What will a Debt Relief Order mean to me?
- Discharge of a DRO usually occurs after a year
- Your name is placed into the insolvency register
- You are removed from the insolvency register after three months but your credit will be affected for at least 6 years following
- All debt is frozen while in the DRO
- Legal action against you cannot be taken while in the DRO nor can creditors pursue you
- A DRO can seriously affect current and future employment