A Debt Relief Order (DRO) is a form of insolvency designed to help individuals with limited income and assets clear their debts. CANH tells you what you need to know about DROs: 

To qualify for a DRO, you must meet the following criteria: 

- Your total qualifying debts must be under £50,000 (£30,000 before June 28, 2024). 

- You don't own a home or have a mortgage. 

- Your total assets, excluding essential household items and tools for work, are worth less than £2,000 (£4,000 for vehicles from June 28, 2024). 

- Your disposable income after paying essential living expenses is £75 or less per month. 

- You have lived or worked in England or Wales within the last three years. 

- You haven't had a DRO in the last six years or been involved in another insolvency procedure. 

To apply for a DRO, you must go through an approved intermediary, such as a debt advice charity like Citizens Advice or National Debtline. They will assess your eligibility and help you complete the application. Since April 6th there is no longer a fee to apply.  

Once approved by the Insolvency Service, your DRO will last for 12 months. During this time, your creditors cannot take further action against you, and interest and charges on your debts are frozen.

If your circumstances don't improve, your qualifying debts will be written off at the end of the 12-month period. 

A DRO will negatively impact your credit rating for six years from the start date, making it difficult to obtain credit during this time. However, it will provide debt relief and allow you to start rebuilding your finances. 

While under a DRO, you cannot borrow more than £500 without informing the lender, act as a company director, or manage a business without disclosing your DRO status.

These restrictions aim to ensure you manage your finances responsibly during the DRO period. 

A DRO can provide a fresh start for those struggling with unmanageable debts, but it's crucial to understand the eligibility criteria, process, and implications before pursuing this debt solution. 

We offer free, confidential, impartial, and independent advice on cost-of-living issues.

You can contact the Herts Citizens Advice line at 0800 144 88 48 or visit northhertscab.org.uk or stevenagecab.org.uk for more ways to get in touch.