With so many debt solutions currently available, it can become very confusing as to which
one will be the best. All have their pros and cons. Debt Relief Orders (DROs) are
specifically aimed at those on a low income, with little or no assets, and where other
solutions, such as bankruptcy, or and Individual Voluntary Agreement (IVA) is not available.
Who can apply
Due to the nature of a DRO, there are certain criteria that must be met for an individual
to be considered. These are as follow:
• The applicant must have no more than £15,000 of unsecured debt.
• The applicant is in a position where they cannot repay their debt.
• Assets and savings combined total no more than £300.
• Any vehicle owned is not worth more than £1000 (this does not apply if the vehicle as
been specifically adapted for a disability).
• Disposable income (ie any money left over at the end of them month after essential
expenditure such as rent, food and utility bills) is less than £50 per month.
• The applicant resides in England or Wales, and must have done so for at least 3 years.
As an applicant is required to have no more than £300 in assets, it is unlikely that
anyone who owns a property will meet these criteria. Therefore they will not usually
be eligible for a DRO. Homeowners may be better off considering an alternative, such
as an IVA or bankruptcy.
When a DRO might be refused
Where any of the above criteria are not met, then it is likely an application for a DRO
will be refused. Furthermore, if the applicant has undertaken a DRO or any other form of
debt solution, such as an IVA or bankruptcy, within the previous 6 years, then they will
not be eligible for a DRO. If an applicant is also expecting a windfall payment during the
expected term of the DRO, such as an inheritance, they will not be eligible for a DRO, as
it is assumed that the individual’s circumstances are unlikely to change.
It is important that anyone considering a DRO seeks advice from a qualified and licensed
money advisor, insolvency practitioner, or from one of the numerous non fee charging
organisations such as the Citizens Advice Bureau (CAB), or the National Debtline.