Debt Relief Order (DRO)

Am I eligible for a DRO?
You can get a DRO if:

• the total amount of debt you owe is less than £30,000
• you have less than £75 per month disposable income (money left after living expenses)
• you have less than £2,000 in assets and/or savings
• you have lived in England or Wales within the last three years 
• you have not already applied for a DRO within the last six years

Advantages

• If you qualify for a DRO, you will be able to write off up to £20,000 of unsecured debt.
• The cost for a DRO is £90 which is a lot cheaper than the fees for Bankruptcy. This can be paid in instalments over a 6 month period, however your DRO cannot be submitted until all the payments are made.
• A DRO is a formal solution, so creditors for the debts included in the DRO are not able to chase you for payments once it has been approved.
• If your situation has not changed after 12 months, your debts will be written off.

Disadvantages

• Not all debts can be included such as student loans, child support maintenance and magistrates’ courts fine, as well as any debts that incurred as a result of fraudulent activity.
• If you have given away assets, sold goods for less than their value or paid certain creditors in favour of others in the two years prior to your DRO application, a DRO could be refused.
• A DRO will show on your credit file and you will find it difficult to obtain credit for a period of six years.
• You cannot borrow £500 or more without telling the lender that you have a DRO in place.
• You cannot get involved in the promotion of, management of, or setting up of a limited company, or be a company director without getting permission from the Insolvency Service.
• During the DRO and for three months following its completion, you will appear on the Individual Solvency Register. This can be viewed by anyone. This can be omitted in special circumstances if agreed by the courts.

What debts can be included in a DRO?

• Arrears on household bills such as rent, gas, electric, telephone and Council Tax
• Consumer debts such as credit card debt, payday loans, overdrafts, catalogues or store cards
• Benefit overpayments, unless they were due to fraud
• Hire purchase (HP) or conditional sale agreements 
• Items bought on finance, including anything bought on a buy-now-pay-later agreement 
• Money owed to friends or family

What debts won’t be written off in a DRO? (You must keep paying them)

• All student loans (old and new style)
• Magistrates' court fines
• Debts to the child maintenance service or CSA
• Social fund loans
• Criminal fines (including debt incurred under the Proceeds of Crime Act)
• Claims against you for damage or personal injury
• TV licence arrears
• These will still be included when working out the total amount of debt you owe, so if they take you over the £20,000 then you will not be eligible for a DRO.

How can I get a DRO?

• One Manchester have authorised intermediaries which means we can do this for you. 
• We will help you apply for your credit files to make sure all your debts are included.
• You will need to pay the £90 fee at a PayPoint using a barcode on the letter we send you. 
• Once we have all the information we need and you have paid the fee, we will be able to submit the application for you.
• We will let you know when we receive the decision from the Official Receiver. This usually only takes a few days.

Things to consider

• A DRO does not prevent a landlord from taking action over rent arrears; however at One Manchester we will not take any further action once a DRO has been approved.
• Payment to bailiffs who have already taken control of your belongings through a controlled goods agreement will not be stopped by submitting a DRO.

DRO Procedure

• An authorised DRO Intermediary (DRO Adviser) will need to gather all the information required to submit a DRO Application. This includes working out your income and expenditure, identifying your creditors, working out how much you owe and whether you have any assets. 
• The application will be made to the Official Receiver (OR) once the fee of £90 has been paid.
• The OR can then accept, defer or refuse the DRO.
• If accepted, you must co-operate with the OR if they have any further questions or need more information but this is very rare. A notice will be sent to you and your creditors informing of the DRO. 
• If your circumstances change you must tell the OR.

For help with debt, speak to our friendly One Money team of specialist advisers on 0330 355 1000 or email onemoney@onemanchester.co.uk