Debt Relief Orders (DROs) are a form of debt relief available in the UK for individuals who have low income, minimal assets, and relatively low levels of debt. They are designed to provide a fresh start for people who are struggling with debt by allowing them to have their debts written off after a certain period, typically 12 months. However, DROs have limited applicability to UK mortgages due to specific eligibility criteria and the nature of mortgage debt. Here’s an explanation of Debt Relief Orders and their relationship to UK mortgages:

Debt Relief Orders (DROs):

1. Eligibility Criteria:
   • To qualify for a Debt Relief Order, individuals must meet certain criteria, including:
     • Having debts of £30,000 or less.
     • Owning assets valued at £2,000 or less.
     • Having disposable income of £75 or less per month after essential living expenses.
     • Not having been subject to bankruptcy proceedings, an Individual Voluntary Arrangement (IVA), or another DRO in the last six years.
2. Application Process:
   • Individuals must apply for a Debt Relief Order through an approved debt advisor or intermediary, who will assess their eligibility and help them complete the necessary paperwork.
   • If approved, the DRO is granted by the Insolvency Service and entered into the Individual Insolvency Register.
3. Effect on Debts:
   • Once a DRO is in place, creditors listed in the DRO are unable to pursue the individual for payment of the debts covered by the order.
   • After the 12-month period, assuming the individual’s circumstances have not changed significantly, the debts included in the DRO are written off, providing a fresh start.

Relationship to UK Mortgages:

1. Exclusion of Mortgage Debts:
   • Mortgage debts are typically excluded from Debt Relief Orders. This means that individuals cannot include mortgage arrears or their entire mortgage debt in a DRO.
   • Mortgages are considered secured debts, meaning they are backed by the property itself. DROs are designed for unsecured debts, such as credit card debts, personal loans, and overdrafts.
2. Limited Impact on Mortgage Debt:
   • While DROs can provide relief from unsecured debts, they do not directly address mortgage arrears or the underlying mortgage debt.
   • Individuals struggling with mortgage payments may need to explore other options, such as negotiating repayment plans with their mortgage lender, seeking financial advice, or, in extreme cases, considering options like repossession or selling the property.

Conclusion:

Debt Relief Orders (DROs) offer a form of debt relief for individuals with low income, minimal assets, and relatively low levels of unsecured debt. However, DROs have limited applicability to UK mortgages due to specific eligibility criteria and the nature of mortgage debt as a secured debt. While DROs can provide relief from unsecured debts, they do not directly address mortgage arrears or the underlying mortgage debt. Individuals struggling with mortgage payments should explore other options and seek financial advice to address their mortgage debt effectively.