UPDATE 10 May 2021 The Insolvency Service has announced the new limits that will be introduced for Debt Relief Orders (DROs) from 29 June 2021. These are: the total debt allowable in a DRO goes up from £20,000 to £30,000. the level of "surplus income" after paying your bills and everyday expenses has been increased from £50 to £75 per month. an increase in the general assets you … [Read more...]
Articles on Debt Relief Orders (DROs)
Debt Relief Orders (DROs) are described in detail here A Guide to Debt Relief Orders. That lists the conditions for getting a DRO - your total debts have to be less than £20,000), you can't own a house etc - together with their advantages and disadvantages and how to set one up.
DROs are a form of insolvency so don't consider one if you only have a temporary debt problem. But if your debt problem is serious and you meet the DRO criteria, then a DRO is very often the best possible solution for you.
DRO applications – frequently asked questions
A Debt Relief Order (DRO) is often the best debt solution if you have under £30,000 of debt, you are renting and you have hardly any spare money to repay your debts. You don't have to make any payments in a DRO and, after a year, your debts are wiped out. Update - the DRO limits described in this article are the new limits that are being introduced from the end of June. So if you are applying … [Read more...]
Should I end my IVA and change to a DRO?
If it's getting hard or impossible to afford your IVA , you may wonder what your other alternatives are. If you don't own a house and your debts are under £30,000 you may qualify for a Debt Relief Order (DRO). Your IVA may have been sensible when it was started, but a change in circumstances (pay drop? rent increase? new baby? separation?) may now be making it hard to afford the payments. Or … [Read more...]
How to improve your credit rating after a DRO
A Debt Relief Order (DRO) lasts for one year and then your debts in it are wiped out. But it shows on your credit record for six years. This article looks at what should happen to your credit record during the DRO year and after it has finished. Some of your creditors may have go tt this wrong, you need to ask them to correct any problems. You can start to improve your credit rating after … [Read more...]
“If I get a payday loan refund, what will happen to a DRO?”
A reader, Mrs H, asked: I am thinking of applying for a Debt Relief Order (DRO) but I have made some payday loan refund claims. If I win these will I still get the money if I have the DRO? This article looks at the general problem of getting this sort of refund. It also applies to PPI refunds and to other refunds such as from Provident or catalogues. If you get a refund and you still owe … [Read more...]
“When I am made redundant, should I go for a Debt Relief Order?”
Ms G asked: I have about £18,000 of debts which I can't afford to pay after my partner left. I am part-time at work, with very little money and renting, but I have been told I will be made redundant in November. I should get about £2,500 redundancy pay and I will need that while I look for a proper job - I won't get Universal Credit straight away. So is it best to wait and apply for a Debt Relief … [Read more...]
“What happens to a DRO if I move in with a new partner?”
A reader asked: I’m a single parent and have had about 10k of debts in a debt management plan for several years. I’m on low income and it looks like it will never end plus I have got some further debts. Now I’m considering a Debt Relief Order (DRO). But I met someone and I’m thinking about starting to live together. I don’t want to tell him about my debts and really want to sort this out … [Read more...]
DROs – what if my pay increases or I get a lump sum of money?
A Debt Relief Order (DRO) is a simple and cheap alternative to bankruptcy if you are renting and have little money to spare each month to repay debts. A DRO lasts for 12 months and during this time you must inform the Official Receiver (OR): if you receive any money or other assets, or if your income increases. If this happens, the Official Receiver (OR) may 'revoke' your DRO. This … [Read more...]
Which is better a DRO or an IVA? There is a very simple answer!
Everyone has heard of bankruptcy, but Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs) are less well known. Here is a comparison of IVAs and DROs, so you can see would be better for you. DROs and IVAs were the two most common types of personal insolvency in England and Wales in 2019. Some choices between debt solutions are genuinely hard. When I wrote … [Read more...]
You both have debts – but may need different debt solutions
You both have debts, you both know it's time to tackle them and you want to do this together. But if one of you has a lot more debt, or a much larger income, or you own different assets, you don't have to have the same debt solution. A good debt adviser will help you look at what option each of you needs to get the best result for your family going forward. This article looks at some of … [Read more...]