Debt Relief Orders (DROs) are an alternative solution to bankruptcy for those who
have found themselves in debt and are struggling to repay. Unlike many of the
alternatives, such as Individual Voluntary Agreements (IVAs), DROs are specifically
aimed at those on a low income and who have no assets that could be used to repay
some of the debt.
There are a number of benefits that a DRO can offer individuals:
Those in debt will often find themselves being bombarded with letters and phone calls
from creditors and debt collection agencies demanding any money owed. This can have a
huge impact on the health of the individuals involved. As a DRO is approved by the
official receiver, and is a legally binding order, creditors are no longer permitted
to chase the debtor, thereby immediately putting a stop to daily and sometimes hourly
A DRO is only available to those on a low income (ie with less than £50 left over at
the end of the month after all essential expenditure). As such, it is designed to be
an affordable option, allowing such individuals to become debt free. Unlike Bankruptcy,
where the fees are in the region of £750, the application fee for a DRO is just £90.
This can often be paid in instalments. The conditions of the DRO also mean that any
interest is frozen on the debt owed for the duration of the order (usually 12 months),
and during this period, the debtor is not required to make any repayments. This can
free up finances, ensuring essential bills are met.
Where alternatives, such as an IVA, are usually in place for in the region of 5 years,
a DRO only applies for a period f 12 months. Once this period is over, assuming the
individuals financial circumstances have not changed, the debt is written off. By
having a fixed period, a debtor will always be able to see the light at the end of
As with any debt solution, it is important that anyone that may be considering a Debt
Relief Order seeks advice from be it from a licensed money practitioner, or one of the
many free advice services, such as the Citizens Advice Bureau (CAB), National Debtline or
the Consumer Credit Counselling Service (CCCS).