A debt relief order is an alternative to bankruptcy for people struggling with debts of less than £20,000.
A debt relief order is only available to people who have a disposable income of £50 or less per month and personal assets worth less than £1000. Motor vehicles worth less than £1,000 will generally not be included in this limit.
- Unsecured debt – Loans, credit cards, store cards, overdrafts, payday loans.
- Household debts – Rent, utilities, telephone, council tax.
- Finance – Hire purchase, credit agreements, buy now pay later agreements.
Individuals with relatively low liabilities, small surplus income and few or no assets and who are possibly not in a position to pay off their debts in a reasonable time.
- Unable to pay their debts.
- Total unsecured debt must not exceed £20,000.
- Total gross assets must not exceed £1000.
- Disposable income, following deduction of normal household expenses, must not exceed £50 per month.
- Live in, or in the last 3 years have been resident or carrying on business in, England or Wales.
- Must not have previously been subject to a debt relief order within the last 6 years.
The debtor must not be involved in another formal insolvency procedure at the time of application for a DRO, such as:
- An undischarged bankrupt.
- A individual voluntary arrangement.
- A bankruptcy restrictions order or undertaking.
- A debt relief restrictions order or undertaking.
- An interim order.
- A pending debtor’s bankruptcy petition in relation to the debtor but the debtor has not been referred to the DRO procedure by the court as a more suitable method of debt relief.
- A current pending creditor’s bankruptcy petition against the debtor but the debtor has not obtained the creditor’s permission for entry into the DRO process.
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