DROs reach one-year anniversary

21 April 2010

This month marks the first anniversary of the Debt Relief Order, or DRO - a new form of insolvency aimed at helping the most vulnerable borrowers clear their unmanageable debts.

DROs, which were introduced on 6th April last year, are only available to people with debts of less than £15,000, personal assets worth less than £300 (not including a car), and a monthly disposable income of less than £50.

For a fee of £90, borrowers who meet the criteria can have their debts written off after a year, assuming their circumstances don`t improve in that time.

In the first three quarters they were available - up to the end of last year - 11,831 people entered into a DRO, accounting for around one in nine of the personal insolvencies in England and Wales during that period.

A debt expert at Think Money said: "Debt Relief Orders have opened up insolvency to more struggling borrowers - borrowers who may have previously been stuck, unable to afford bankruptcy but not eligible for an IVA [Individual Voluntary Arrangement].

"Uptake of DROs has increased consistently since they were introduced, which suggests that there is a real need for them amongst low-income borrowers."

Tags: DRO, debt, debt relief order, IVA, bankruptcy, low income

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