In the UK there are a number of debt relief options that are available to individuals with financial problems. These options include debt management plans, Individual Voluntary Arrangements and bankruptcy. In certain circumstances a further alternative is a Debt Relief Order.

What is a Debt Relief Order?

Debt Relief Orders (DRO) were introduced by the UK government as recently as April 2009 as a means of allowing people to apply for personal bankruptcy without having to go through the full Court bankruptcy procedure. A DRO is much a cheaper option than bankruptcy, although it is restricted in who can apply. Unlike bankruptcy the debt relief order is approved directly by the governments Insolvency Service. The Order lasts for up to one year and during that time you are completely protected from action by your creditors to get their money back. Upon completion the debts listed under the DRO will be written off leaving you debt free.

Who can apply for a Debt Relief Order?

There are significant restrictions on who can apply for a Debt Relief Order. Firstly in order to qualify for a DRO you must have unsecured debts of no more than £15000. You also be on a low income leaving you have spare available income of £50 or less a month after paying your normal household expenses and have savings of less than £300. Additionally you would be excluded if you have a private pension fund or if you own a vehicle worth more than £1000. Finally you must in the last three years have lived, had a property or run a business in England or Wales.

What types of debt can be included in the Debt Relief Order?

Only certain types of debt can be included in a DRO. Qualifying types of debt include credit card debts, loans, utilities bills, council tax, rent payments and buy now-pay later agreements. Types of debt that can not be included in DRO include child support payments, court fines and student loans.

How do you apply for a Debt Relief Order?

Usually you will apply for a DRO through an approved third party or intermediary. This intermediary would usually be a professional debt adviser who has been given permission to complete the forms and give advice on debt relief orders.