Debt Relief Orders - What debt can be included?

There are numerous solutions available to those who have found themselves in financial difficulty, from Individual Voluntary Agreements (IVAs) to Debt Management Plans (DMPs). A Debt Relief Order (DRO) is aimed at those on a low income, with no assets, and physically cannot repay their debts. As such, they are only available to those with less than £50 at the end of the month after all essential expenditure.

Debt that can be included (or qualifying debt)

Generally speaking, any unsecured debt up to a total of £15,000 may be included in a DRO:

• Credit cards or store cards • Any unsecured loan (a DRO is only available to those with assets worth less than £300, so it is unlikely that an applicant would have any secured loans) • Store credit, such as 'buy now, pay later' loans • Payday loans • Rent, utility and council tax arrears • Telephone bill arrears (where it is vital that a telephone line is kept) • Hire Purchase agreements (as the applicant would effectively default on the agreement, it is likely that the Hire Purchase provider would repossess the goods) • Tax credit or benefit overpayment (except in cases where the overpayment was obtained by fraudulent activity) • Tax, VAT and National Insurance arrears

Debt that cannot be included in a DRO (non qualifying debt)

There are some debts that cannot be included in a DRO:

• Any secured loans (though as above, it is unlikely that the applicant would have any secured debt) • Student Loans (as with many debt solutions, Student Loans are excluded from a DRO) • Child support and/or maintenance • Any outstanding court fines • Any debt obtained after the DRO is in place • Budgeting and/or crisis loans if the DRO application is made after 19th March 2012

As with any debt solution, it is important that the individual seeks proper advice from a licensed money advisor, Insolvency Practitioner or from one of the non fee charging organisations, such as the Citizens Advice Bureau (CAB), National Debtline or the Consumer Credit Counselling Service (CCCS).