Debt Relief Orders (or DROs) are a popular solution for those struggling to repay debt and
are on a low income. In order to be eligible, the applicant must not have more than £50 per
month left after all essential expenditure (excluding debt repayments) and have no assets
totalling £300 or more in value.
Throughout the duration of a DRO, which is usually 12 months, repayments to any debt covered
by the order will cease. Furthermore, creditors are not able to contact the individual to chase
the debt. This can relieve much of the stress associated with debt. It is important that essential
expenses, such as utility bills, council tax and rent are still paid throughout this time.
There are a number of restrictions that are in place throughout the duration of a DRO:
It is not possible to apply for additional credit of more than £500 without informing the lender
that there is a DRO in place. Furthermore, debt cannot be added to a DRO once it is in place. As
with any change in circumstances, the Official Receiver will need to be notified of any additional
debt accrued during the DRO, even though it cannot be included.
Work and Business implications
While an individual is subject to a DRO, they are unable to trade or conduct business in any name
different to that in which the DRO was applied. It is also not possible to become a Company Director,
nor form or be involved with the formation and management of a limited company without the permission
of the court during the duration of the DRO.
Future Debt Relief Orders
Once a DRO has been granted, it is not possible to apply for another one until 6 years after the
previous DRO has ended.
As ever, anyone considering a DRO should always seek advice from a licensed money advisor, or from one
of the free advice services available, such as the Citizens Advice Bureau (CAB), National Debtline or the
Consumer Credit Counselling Service (CCCS).