Debt Relief Orders came into force on 6 April 2009.
DROs provide debt relief, subject to some restrictions. Individuals who do not own their own home, have little or no surplus income and assets and debts that amount to less than £15,000 can apply for a DRO.
A DRO, like standard bankruptcy, lasts for 12 months. In that time creditors named on the order cannot take any action to recover their money without permission from the court. At the end of the period, if your circumstances have not changed you will be freed from the debts that were included in your order. DROs do not involve the courts.
To apply for a DRO, you must meet certain conditions:
1) You must be unable to pay your debts.
2) You must owe less than £15,000.
3) You can own a car to the value of £1000 but the total value of other assets must not exceed £300.
4) After taking away tax, national insurance contributions and normal household expenses, your disposable income must be no more than £50 a month.
5) You must be living in England or Wales, or at some time in the last 3 years have been living or carrying on business in England or Wales.
6) You must not have been subject to another DRO within the last 6 years.
7) You must not be involved in another formal insolvency procedure at the time you apply.