From April 2009 Debt Relief Orders (DRO) are being introduced, so what’s all the fuss about?

What is it?

DRO’s are a new form of Insolvency designed to be cheaper than bankruptcy. They aim to help people who have few assets, little available income and relatively low levels of debt. There is no court involvement with the application; instead an approved intermediary such as the Consumer Credit Counselling Service would help you complete and submit an application if you meet the criteria.

What are the eligibility criteria?

In order to be eligible for a debt relief order you will need to meet the following qualifying conditions:

ü      You must have less than £15,000 debt. Certain debts are excluded, including student loans, secured loans, CSA arrears, criminal court fines

ü      You must have less than £50 a month surplus after your household priority bills have been paid

ü      You must have less than £300 worth of assets. This includes savings, shares, cars, caravans, antiques, jewellery and collectables

ü      You must not be a homeowner

How does it work?

The overall aim of the DRO is to help in releasing you from overwhelming debts.

Applications for a DRO will either be approved or rejected by the insolvency service.

Once a DRO has been agreed a hold will be put on your accounts, this is known as a moratorium period and in most cases will last for twelve months. During this period you will not make any payments at all towards the qualifying debts and your creditors will be unable to take any further action during this time. At the end of the moratorium period, you are discharged from liability for all the qualifying debts listed in the DRO.

What are the costs?

Before an application for a DRO can be considered, a mandatory court fee of £90 must be paid to the insolvency service.

If you would like the CCCS to see if a Debt Relief Order is an option for you, you can visit our free online debt counselling system Debt Remedy or if you would prefer, you can call our Helpline free on 0800 138 1111 to speak to a counsellor.