If you're on a limited income, have unsecured debts that you aren’t able to repay in a reasonable amount of time and relatively few assets, it can be very difficult to know where to turn. A Debt Relief Order (DRO) might be the solution you’re looking for.
A DRO is an alternative to bankruptcy that is only available to people with a limited level of income after paying for essential living costs, and few assets to contribute towards their debts. Bankruptcy may be unaffordable for some people with debt problems, and a DRO could provide a lower-cost route into insolvency. It’s only available if you live in England, Wales, or Northern Ireland. If you live in Scotland, you might be able to enter insolvency via Minimal Asset Process (MAP).
Unlike bankruptcy, there is no need to go to court to apply for a DRO, although you can only apply through an approved intermediary, who will have the necessary permission to handle applications, such as the Debt Advisory Centre.
If your application for a DRO is agreed, payments on your unsecured debts will be suspended for a year. If your circumstances do not improve during this ‘moratorium’ period then, at the end of the 12 months, you are relieved of your debts and they will be written off. If your circumstances do improve at any time during the one-year moratorium, or if you fail to co-operate with the Official Receiver, the DRO may be revoked and you will need to come to an agreement to repay your lenders what you owe. This could be via an alternative debt solution, depending on your circumstances.
It’s important to remember that a DRO is an insolvency solution. As such, there will be some consequences. For example, it’ll be recorded on your credit file for six years, so will have an impact on your credit rating for that time and possibly beyond (you may be asked if you have ever been insolvent in future applications for credit) and you won’t be able to obtain credit worth £500 or more without telling the lender about your DRO during the first 12 months of the arrangement.