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Debt Relief Order

A Debt Relief Order (DRO) is a way to have unmanageable debt written off if you have relatively low income and few assets. If your debts are becoming unmanageable, a DRO may be your best option.

Customers can get free debt counselling, debt adjusting and providing of credit information services from the Money Advice Service – an organisation set up by the Government to offer free and impartial advice to those in debt. For more information from the Money Advice Service click here www.moneyadviceservice.org.uk
You can find. Government guidance on dealing with your creditors here.

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What is a DRO – Debt Relief Order?

A Debt Relief Order (DRO) is a form of bankruptcy if you have relatively low income and few assets.

You may be eligible:

  • If you live in England, Wales of Northern Ireland
  • If you owe less than £20,000, have assets worth less than £1,000 and a car worth no more than £1,000

You are not eligible if you own your own home.

A DRO will have an impact on your credit rating and may affect certain types of employment.

If you have obtained any debts by fraud, you will still have to pay them when the DRO has ended.

If you’re behind on your rent, your landlord can still take action to get their property back, even if the rent arrears are included in your DRO, which means you may have to continue paying these after a DRO is made.

Debts which can not be included in a DRO:

  • Magistrates court fines
  • Child support and maintenance
  • Student loans
  • Social fund loans
  • Compensation for death and injury.
  • Confiscation orders

These debts mentioned above can not be included in a DRO. A DRO will last for around one year and you will not be required to make payments towards most types of debt included in your DRO. The businesses that you owe money to will not be able to force you to pay off the debt.

Please be aware that lenders are not obliged to accept less than contractual, payments or to freeze interest and charges. This may result in an increase in the total, amount repayable and may affect your credit rating.

Pros & Cons of a DRO (Debt Relief Order)

Advantages of a DRO

  • A Debt Relief Order is a formal solution so creditors cannot chase for payments
  • All debts in a DRO are cleared after one year
  • During the 12 months the DRO is in place, you will not be required to make any payments towards the included debts
  • Interest and charges relating to debts including in the DRO will be frozen for the 12 months the DRO is active

Disadvantages of a DRO

  • A Debt Relief Order will affect your credit rating and, your ability to gain credit will be limited and the DRO will remain on your credit file for 6 years
  • A Debt Relief Order can impact on certain jobs
  • If your circumstances improve during the 12 months, the debts could be reverted back to you
  • You cannot have more than £1000 worth of assets
  • It is a criminal offence to falsify information on a DRO
  • Entering into an IVA, debt relief order or a protected trust deed means that your details will be entered onto a public register
  • The fee for entering into a DRO is £90

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