Debt Relief Order (DRO)?


Debt Relief Order (DRO)?

What is a Debt Relief Order?

A Debt Relief Order is designed for those who have very little income, have assets with a value of less than £300 and owe less than £20,000 to help them deal with debts that they are unable to repay within a reasonable period of time.

Available only to those living in England, Wales or Northern Ireland, this solution is an alternative for those who are unable to qualify for an Individual Voluntary Arrangement (IVA) due to their debt level or affordability. For Scottish Residents, a similar solution known as a MAP is available.

Individuals have to meet certain criteria to be eligible for a DRO; for example, you must have a disposable income of less than £50 after all other household bills have been paid.

If you own a car it must be valued at less than £1,000 and you must not have been in a DRO in the last 6 years.

It costs £90 to apply for a DRO. If approved, you will no longer have to make any payments to the debts included.

If your circumstances haven’t improved within 12 months of the DRO being approved, the debts will be written off.

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What kinds of debt can be included in a DRO?

There are limitations on the kinds of debts that can be included in a DRO. Generally, unsecured debts eligible for a DRO include:

  • Overdrafts
  • Credit/store cards
  • Bank or personal loans
  • Utility bills
  • Council Tax arrears
  • Rent arrears

Step 1

Individuals cannot apply for a DRO on their own, so the first step needed is to contact a DRO adviser who will submit an application to the official receiver at the Insolvency Service.

They will talk through your situation to check if your eligible and if a DRO is the right solution for you.

Step 2

If it’s decided that a DRO is the solution that’s best for your circumstances, the adviser will make an application on your behalf. The application cannot be submitted until the £90 fee has been paid in full.

The fee can be paid in instalments. If you are unable to afford it, you can apply for it to be paid through a charity or trust fund; however, this is subject to qualification and isn’t guaranteed.

Step 3

If your DRO is approved, your debts will be put on hold for 12 months and you will no longer need to make payments to the ones that are included.

Your name will be published on the Individual Insolvency Register and the DRO will be noted on your credit file for 6 years from the date of approval.

During the term of the order, you will have to abide by some restrictions. You will not be able to act as a director of a company and if you own a business, you must make anyone that you do business with aware of your DRO.

You must also inform any potential lenders of your DRO if you are seeking credit over £500, however, you may find it difficult to obtain credit due to the order being noted on your credit file.

Creditors are still able to add interest and charges during this time; however, this will not affect you unless your DRO is revoked within this period.

Step 4

If your circumstances haven’t improved after the 12-month period, the debts included in your DRO will be written off, and you will be discharged from the order.

Your name will then be removed from the insolvency register 3 months after your discharge.


  • If your assets are valued at £300 and your car is valued at less than £1000, they will be protected, and you won’t have to sell them.
  • It is relatively affordable, with only a £90 fee for the application, which can be paid in instalments up to 6 months
  • Creditors cannot take any action against you for the debts included in the DRO
  • Your debts will be written off at the end of the DRO term, which is typically 12 months


  • You will still need to make payments to your rent and other household bills along with debts that cannot be brought into a DRO such as court fines, student loans and child maintenance/support
  • You cannot apply for a DRO if you have been in another DRO in the last six years.
  • Your name will be published on a public register
  • If you are a homeowner, you are unable to apply for a DRO – even if your home is in negative equity
  • You cannot take out any new credit over £500 without making the lender aware that you are subject to a DRO. It is a criminal offence if you do not disclose this.

Frequently Asked Questions

A DRO is, in essence, a low-cost alternative to bankruptcy. The main advantage of this debt solution is that it freezes all interest and charges on your unsecured debts, which allows you to stop making payments to them for a 1-year period.

The other main advantage of using a DRO is that if your circumstances do not improve by the end of the period, the debts are written off. Creditors are also unable to contact you of the DRO is granted, removing what can be a huge source of stress from daily life.

On the other hand, this solution is not without its pitfalls. Like all debt solutions, it is not a “quick fix”, and if your circumstances do improve with the 1-year period, your DRO may be revoked.

If this happens, your creditors will be able to contact you again and you will need to find an alternative solution for your debts. There is also a very strict set of criteria to be eligible for a DRO and if you are granted one, you will be subject to certain credit and occupational restrictions.

Finally, DROs are recorded on the Insolvency Register, which is a publicly accessible and available for anyone to search on.

In order to be eligible for a DRO, there is a strict criteria that needs to be met. You must:

  • Have a debt level of £20,000 or less
  • Not be a homeowner
  • Have £50 or less disposable income
  • Own assets with a value of less than £300 (excluding an essential vehicle, which can be worth up to £1,000)
  • Not been in another DRO within the last six years.
  • Have lived in England or Wales at some time in the last three years

Generally, most types of unsecured debts can be included in a DRO, including credit card, personal/bank loans and overdrafts.

Certain unsecured debts, such as child maintenance/support, student loans and court fines related to criminal activities, cannot be included. All secured debts, and hire purchase are also unable to be included

For the purpose of a DRO, anything valuable that you own is considered an asset. This includes certain vehicles, savings, stocks and antique items.

Any equity you have in a property is also considered an asset, however you will not be able to apply for a DRO if you are a homeowner.

When applying for a DRO, the total value of your assets must not exceed £1,000; however, items deemed to be essential such as most furniture, work equipment and clothing do not count towards your asset value.

If your circumstances have not changed by the end of your DRO, all debts included are written off; meaning they will never have to be repaid. However, any debts that weren’t covered by the DRO will still need to be paid.

In short, yes. Your DRO is recorded on your credit file and will remain there for six years, which can indicate to credit reference agencies and potential lenders that you have had trouble with debt in the past.

As such, they will be less likely to offer your credit. Fortunately, there is plenty you can do to rebuild your credit score once your DRO has ended.

If your circumstances are to change during the course of your DRO, such as changes to your income, receiving an inheritance/windfall or moving home, it is vitally important that you notify your official receiver as soon as possible.

If you do not notify them, your order may be revoked. As such, if you are unsure whether you need to report something, it’s always best to contact them and double check.

Unfortunately, once your DRO is in place you are not able to add any new debts to the arrangement.

As you can only apply for a DRO once every six years, if you find yourself struggling with new debts that you have accrued, you will need to seek an alternative option.

Being employed does not prevent you from applying for a DRO as you are not expected to make any payments during the order.

As such, your employment status does not affect the outcome of your application.

Yes, there are certain restrictions you will have to stick to whilst in a DRO. You will not be able to establish, manage or act as a director for a company without court permission and you will not be able to apply for credit higher than £500 without informing the lender of your DRO.

There are also restrictions to consider when applying for a DRO. For example, you cannot simply give away assets in order to meet the eligibility criteria; this can result in being denied the DRO or even jail time.

This solution is only right for a small number of people, so make sure you speak to a qualified adviser before applying for a DRO.

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