Personal Insolvency – Debt Relief Orders (“DRO”)

DRO’s came into force in England and Wales on 6th April 2005.  They cost £90 and are intended to be a low cost alternative to Bankruptcy. DRO’s are administered by the Official receiver and are available to debtors who:

Owe less than £15,000 in total.

Have assets worth no more than £300 (although a debtor may have one vehicle worth no more than £1,000)

Have less than £50 a month of disposable income i.e. after settling their living costs.

DRO’s are not available to individuals who have an interest in a property (even if it is in negative equity).

A debtor can only apply for a DRO though an approved intermediary. The Citizens Advice Bureau will put debtors in touch with an approved intermediary in their local area.

Once a DRO is made the debtor’s debts are frozen for twelve months. During this time creditors cannot pursue the debtor nor can they add interest or charges to the debt. If after 12 months the debtor’s circumstances have not changed the debts are written off.
There are three formal insolvency procedures available to an insolvent individual (“debtor”).