A Debt Relief Order (DRO) is a way to deal with your debts if you rent your home, have few assets and little disposable income.
You get a DRO from the official receiver, an officer of the bankruptcy court, but you must apply through an authorised debt adviser.
If you have rent arrears you need to get specialist advice before applying for a DRO as there may be a risk to your tenancy.
If you have a DRO:
- your creditors can’t recover their money from you without the court’s permission
- you will usually be free from your debts after 12 months
Visit Debt Relief Orders on GOV.UK for more details about eligibility and restrictions of DROs.
Advantages
It helps relieve stress and anxiety.
There is no court hearing.
You can make a fresh start after a year.
Your debts are written off if they were included in the DRO.
Most debts can be included in the DRO, including priority debts, such as rent arrears, fuel debt and Council Tax.
Once you have a DRO your creditors cannot take any further action.
You won’t make monthly payments on your debts included in the DRO.
Disadvantages
You can’t apply if you own your home as this is counted as an asset.
Secured creditors can still act against you.
Not all debts are written off, for example student loans, court fines, penalties for fraud, maintenance and child support payments.
If you forget about a debt, you cannot add it later.
Details of your DRO will be in the Individual Insolvency Register.
It will affect your credit rating.
You may have a ‘debt relief restriction order’ made against you for dishonesty or ‘unfit conduct’.
There are some powers for the Official Receiver to take criminal action against you, for example, if you have committed fraud.