A Debt Relief Order, often shortened to DRO, is a formal debt solution for some people who cannot afford to repay their debts, have little spare income, and do not own their home. It is not a budgeting trick or a quick reset button. It is a legal option with rules and consequences.
At the time this article was reviewed, GOV.UK said DROs may be suitable if you owe less than £50,000, have less than £75 a month spare income, do not own your home, have limited assets, and meet other rules. These limits can change, so always check current guidance before relying on them.
If a DRO is approved, you usually stop making payments towards the debts included in it for 12 months. During that period, you need to follow certain restrictions. If your situation has not improved after the 12 months, the included debts are usually written off.
Some debts still have to be paid. GOV.UK lists examples such as rent and bills, as well as certain debts that cannot be included, such as student loans or court fines. This is one reason it is important to get advice before assuming a DRO will cover everything.
A DRO can be cancelled if your financial circumstances change, and the restrictions can be extended if the rules are not followed. It can also affect your credit file and may affect some work or financial arrangements. None of that means a DRO is bad; it means it should be considered carefully.
You cannot just apply for a DRO directly in the same way you might fill in a normal online form. It has to go through an approved debt adviser or approved intermediary. They will check whether you qualify and whether another solution would be more suitable.
A DRO can be a helpful route for the right person, especially when there is no realistic way to repay debts and very little room in the budget. But it is not something to choose because an advert made it sound simple. Get free advice and make sure the option fits your life.
Clear Balance provides general information, not debt advice. Before choosing a DRO or any formal debt solution, speak to a free, regulated debt adviser.
This article is for general information only. It is not debt advice or legal advice.
