Debt Solutions - Debt Relief Order

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Whilst DRO’s do offer valuable breathing space, certain debts must still be paid, even when a DRO is in place. These include:

• Child maintenance
• Student loans
• Budgeting or crisis loans from the Social Fund
• Debts secured against your assets
• Fines for drug offences
• Court-ordered damages or fines
• Unpaid TV license fees

Any debts you incur after the DRO is granted

Mortgage payments, rent and all regular bills must still be paid as well.

There are restrictions regarding your financial activity under a DRO, as well as certain rules regarding how soon you would be able to apply for one in the future.

However, some important things worth noting about DRO’s include:

• You might be eligible for a Debt Relief Order if you have disposable income of less than £75 per month, personal assets below £2,000, a car worth less than £2,000 and total debts of less than £30,000. You should also have lived or worked in England or Wales for the last 3 years and not had a DRO in the last 6 years.
• Debt Relief Orders cost £90. You can pay in instalments over six months, but the fee must be paid in full before your application is looked at.
• Should your circumstances change and your financial situation improve at any time within the period of the DRO (usually 12 months) the DRO may be revoked so that you can arrange to pay your creditors.

Applying for a DRO must be done through an authorised debt adviser (known as an ‘approved intermediary’). They will make the application on your behalf to an officer (known as an official receiver) of the bankruptcy court.

• Individual Voluntary Agreement (IVA) – an agreement with your creditors to pay all or part of your debts. This is where a person agrees to make regular payments to an Insolvency Practitioner, who then divides the money between the person’s creditors. This option gives people more control over their assets than bankruptcy, Individual Voluntary Agreement (IVA) information. <<more info>>

• Debt Management Plan (DMP) – The difference between a DMP and an IVA is that with a DMP, all outstanding debt is repaid. It’s a much more informal solution and therefore, there is no guarantee that interest and charges will be frozen by creditors. It’s also true that creditors can still pursue legal action, whereas, with a legally binding IVA, no changes can be made to an approved agreement. Debt Management Plan (DMP) information. <<more info>>

• Bankruptcy – Bankruptcy presents the opportunity to clear debts and go for a ‘fresh start’ but there are many consequences which must be considered before declaring bankruptcy. Citizen’s Advice covers this in more detail, including timelines, checklists, costs, and implications at, Bankruptcy information. <<more info>>

• Debt Relief Order (DRO) – This presents people with a way of dealing with their debts if they can’t afford to pay them. It is usually granted for 12 months and means a person doesn’t have to pay certain types of debts during that period of time. AN authorised debt advisor, who acts as the intermediary is the only route available for people looking to obtain a DRO. Debt Relief Order (DRO) information. <<more info>>

• Scottish Protected Trust Deed (TD) – A Protected Trust Deed is only available to residents of Scotland and presents an opportunity for people to remain in possession of their home (in most cases). This formal but voluntary agreement is overseen by the Accountant in Bankruptcy, Scottish Protected Trust Deed (TD) information. <<more info>>

• Scottish Debt Arrangement Scheme (DAS) – This scheme was set up by the Scottish Government to allow people an opportunity to pay back their debts without the threat of court action. The DAS presents people with a manageable way of paying back their debts and is eligible for application from people with any amount of debt. Scottish Debt Arrangement Scheme (DAS) information about applying for a DAS. <<more info>>