Debt Relief Order

A debt relief order is an order you can apply for if you can't afford to pay off your debts.

A debt relief order is granted by the Insolvency Service and is a cheaper option than going bankrupt.

A debt relief order usually lasts for a year and during that time, your creditors will not be able to take any action against you to get their money back, at the end of 1 year all the debts listed in the order will be cleared.

You may also be interested in a debt management program

In order to apply for a debt relief order you must meet certain criteria, you must:

have qualifying debts of no more than £15,000. They can only be none priority debts.
you have spare available income of £50 or less a month
Your assets and any savings total no more than £300. However
- if you have a motor vehicle, this must be worth £1,000 or less
In the last 3 years you must have lived, had a property or carried on a business in England or Wales.

You will be unable to apply for a debt relief order if you:

Your assets total more than £300
Own a vehicle worth more than £1,000
Have a private pension fund worth over £300.

To apply for a debt relief order you'll need to contact an authorised adviser who checks whether you meet the criteria and then applies for the order on your behalf. The order will cost you £90 but you can pay this in instalments over six months.

What type of debts can be included in a debt relief order

Only certain types of debt can be included in the order. These are called qualifying debts and are debts such as:

credit cards, overdrafts, loans
rent, utilities, telephone, council tax
benefit overpayments and social fund loans
hire purchase or conditional sale agreements
buy now - pay later agreements.

You will not be able to carry on paying for the goods once you have a debt relief order which could mean you have to give the goods back, for example a hire purchase agreement (such as for a car), the creditor may take possession of the car as you are unable to pay (unless someone else can make the repayments for you)

Certain types of debt (priority debts) can not be included in a debt relief order. You must pay these separately. People you owe these debts to can still take action against you, even if you have a debt relief order. These debts include:

court fines and confiscation orders. These are fines relating to criminal activity
child support and maintenance
student loans.