Debt Relief Orders (DRO)

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A Debt Order (DRO) is an insolvency measure designed as an alternative to bankruptcy,  for debtors who are struggling to meet their liabilities, and have either very few, or no tangible assets. 

The Chancellor has recently announced changes to the qualifying conditions for individuals seeking to apply for a Debt Relief Order. These changes come into effect on 28 June 2024 and are detailed below;

Eligibility Criteria

  • Individuals with unsecured debt of up to £50,000 will be eligible to apply for a DRO; the previous limited was £30,000.
  • The individual applying for the DRO will be able to retain possession of their car if its value does not exceed £4,000. The previous limit was £2,000.
  • Individuals whose personal assets do not exceed the sum of £2,000 are eligible to apply for a DRO. This figure remains the same to the previous legislation.
  • You don’t home your own home and reside in rented accommodation 
  • Individuals that have no more than £75 disposable income each month 
  • Individuals that have been resident in England and Wales for at least three years
  • Individuals that have not been subject to a DRO for the last six years
  • You are not subject to a either a Bankruptcy petition, a bankruptcy Order, or a Bankruptcy Restrictions Order
  • You are not Subject to an Individual Voluntary Arrangement

Debts that qualify to be included in a Debt Relief Order

  • All utility liabilities, (Water rates, Gas, Electric and phone bills
  • HM Revenue & Customs Liabilities relating to PAYE, VAT, National Insurance Contributions.
  • All credit Cards, store cards and catalogue purchases
  • Bank loans and overdrafts
  • Finance Company Loans
  • Debts owed to family or friends
  • Liabilities that arise from receiving an over payment in respect to social security benefits

Debts that are excluded from a Debt Relief order

  • Child Support Agency and Child Maintenance Service arrears and payments
  • Court Fines or liabilities resulting from a Criminal Confiscation Order
  • Student Loans
  • Liabilities that relate to a Personal Injury Claim against you

If you are seeking to apply for a DRO you will need the assistance of a special adviser, who as an “approved intermediary” will be able to guide you through the process. All applications are then reviewed by the relevant office of the Official Receiver. Should you wish to apply for a DRO you should contact your local branch of the Citizens Advice Bureau who will be able to advice you as to how to proceed.