Debt Relief Orders (DRO’s)

DRO’s provide debt relief, subject to some restrictions. They are suitable for people who do not own their own home, have little surplus income, no assets and less than £15,000 of debt.

An order lasts for 12 months. In that time creditors named on the order cannot take any action to recover their money without permission from the court. At the end of the period, if the debtor’s circumstances have not changed, they will be freed from the debts that were included in their order. If you are a creditor and your debt is listed as a debt in a DRO the official receiver will send you a formal notice informing you that a DRO has been made.

While the DRO is in force debts will be subject to a suspension of activity. During this time creditors may not continue or start any legal action against the debtor for repayment of a debt owed, without the permission of the court.

This suspension of activity will normally last for one year but may sometimes be extended. After the end of the suspension of activity period the debts owed are discharged so no further action for repayment of the debt can be taken. If the suspension of activity is extended, or ended early, or if the DRO is cancelled, notice will be sent by the official receiver.

If the suspension of activity is ended early, or the DRO is cancelled, the debtor no longer has the protection of the suspension of activity or discharge and creditors will be free to take action for repayment of their debts.

DRO Advantages

• None of the creditors listed in the DRO application can take further action against you without the court’s permission.
• It allows you to make a fresh start after 1 year.
• The fee (£90) is affordable and can be paid in instalments but the fee must be paid before the application can be made.
• The approved intermediary ensures that you are given appropriate advice and that you fit the criteria for a DRO.

DRO Disadvantages

• Your DRO is entered on a public register.
• You can’t have a DRO if you have an existing bankruptcy order, an IVA, are subject to bankruptcy restrictions, or you have had a DRO in the last 6 years.
• You won’t be able to have a DRO if you own a house, even if it has no equity (value).
• You will remain liable to pay certain debts – in particular student loans, fines and some debts arising from family proceedings.
• Your employment may be affected.
• Your DRO could be revoked (withdrawn) if you don’t co-operate with the official receiver during the year your DRO is in force.
• You can’t act as a director of a company or be involved in its management unless the court agrees.
• You will be committing an offence if you get credit of £500 or more without disclosing that you are subject to a DRO.
• You may have a debt relief restrictions order made against you for 2 to 15 years if you acted irresponsibly, recklessly or dishonestly.
• An order that will place restrictions similar to those in force while subject to a DRO, which the official receiver may apply for.

For further information, complete the contact form on the right.