In as much as things change, they stay the same.

Insolvency is insolvency, and some of the outcomes from insolvency can be going bankrupt, or entering into an IVA/Individual Voluntary Arrangement.

In April 2009, a new form of insolvency was created and it was termed a Debt Relief Order or DRO.

One of the reasons for this new form of insolvency was due to the fact there were many people filing for bankruptcy, but did not have massive amounts of debts. Massive amounts of debt is a relative term, £5,000 of debt may seem massive to one person, and another may feel £20,000 is the massive mark.

DRO’s are very similar to going bankrupt, they are just for those with lower amounts of debt, and have no assets. DRO’s are sometimes called a “bankruptcy-light”, or “mini-bankruptcy”.

The fact you are insolvent and require help from the courts to deal with your debts, is similar to bankruptcy, however, eligibility is slightly different.

Eligibility For a Debt Relief Order

In order to qualify for a DRO you must meet the following criteria:

Pretty simple terms really.

And how does the DRO work you may ask…

You are in the Debt Relief Order for a period of 12 months, similar to being bankrupt. The fee for a DRO is £90, compared to the fee to go bankrupt of £680.

What Debts Can Be Included in a Debt Relief Order?

The following debts can be included in a DRO:

So basically any unsecured debt can be included.

Debts that CANNOT be included in a DRO are:

These are similar to going bankrupt, again a DRO is a mini-bankruptcy.

You are in the DRO for a period of 12 months, and after that your debts are discharged and no longer owed.

The DRO stays on your credit history as does everything, for six (6) years.

Also, as with going bankrupt, you need to report any changes in your income or circumstance, such as if you inherit money to the courts.

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