Debt Relief Order (DRO) – Changes to Qualifying Criteria
Written by Niall Davison on 21 September 2015
From October 2015, the qualifying criteria for Debt Relief Order (DRO) in England and Wales are changing, with an increase in both the maximum permitted debt level and allowed assets. This means that more people who are struggling with debts in England and Wales could now consider Debt Relief Order (DRO) as a possible debt solution.
It’s important to note that although Debt Relief Order is also available in Northern Ireland, the DRO criteria for Northern Ireland residents aren’t changing at the moment.
What is a Debt Relief Order?
A Debt Relief Order (DRO) is basically a simpler version of bankruptcy that’s generally only available to non-homeowners with little or no assets, and a monthly disposable income of £50 or less.
How can I apply for a DRO?
You can apply for a Debt Relief Order without attending court, and the process costs £90, which can be paid in instalments (in England & Wales only) if necessary. You can only apply for a DRO through an ‘approved intermediary’.
So, what’s changing from October 2015?
If you live in England or Wales, the maximum allowable debt level for Debt Relief Order is increasing from £15,000 to £20,000 – and maximum asset limits will rise from £300 to £1,000, plus a vehicle worth no more than £1,000. For Northern Ireland residents, the criteria remain unchanged for now – this is likely to be reviewed some time in 2016.
How does a DRO work?
With a Debt Relief Order, the debts listed in it are discharged (written off) a year after the DRO is approved, and you will then be free from those debts.
Anything to be aware of?
The disadvantages of Debt Relief Order are that a record will remain on your credit file for six years. This will have a serious impact on your credit rating and obtaining further credit is likely to be very difficult during this time.
You may also face restrictions on working in certain professions in the future, and your DRO will also be added to the Individual Insolvency Register.
How to find out more?
The Insolvency Service’s ‘Guide to Debt Relief Order’ gives further information on how it works and what to do next. Visit www.gov.uk in England & Wales (or www.detini.gov.uk in Northern Ireland) and search for ‘debt relief order’ to download a copy of the guide. If you wish to proceed with a DRO application, please follow the instructions in the guide.
Further advice about Debt Relief Orders is available from your local Citizens Advice Bureau (CAB) if you live in England or Wales, or from Debt Action NI if you live in Northern Ireland.
Filed under Debt Facts