What is a Debt Relief Order (DRO)?

Who can have a DRO

You are eligible for a DRO if all of these are true. A debt adviser will check each one with you.

• You owe less than £50,000 in total.
• Your savings and valuable items are worth less than £2,000 in total.
• If you own a vehicle, it is worth less than £4,000 if you sold it today.
• You do not have enough money left at the end of the month to make your debt repayments.
• You have lived or worked in England and Wales in the last 3 years.
• You are not currently bankrupt, and you do not have an interim order or an IVA.
• You have not had a DRO in the last 6 years.

GOV.UK’s debt options page also describes a DRO as one way to deal with debt for people who do not own their home. You cannot apply if you live in Scotland or Northern Ireland.

There are two more rules. You must treat your creditors fairly, so you cannot have paid some of them ahead of others. And you must not have given away or sold valuable things for less than they were worth. The adviser will look at the last 2 years of your payments and sales.

How you get one

1. Contact an approved debt adviser. You cannot apply on your own.
2. They check the rules for free. They look at your income, debts and belongings. If you do not know exactly what you owe or spend, they help you work it out.
3. If a DRO is possible, they fill in the online application and send it to the Insolvency Service for you.
4. You do not go to court.
5. If a DRO is not suitable, the adviser helps you look at other ways to deal with your debts.

There is no application fee. Free advice is available from several charities.

Which debts are covered

These are called “qualifying debts”. They include:

• credit cards, overdrafts and loans,
• rent arrears and utilities such as gas, electricity and phone,
• council tax and income tax,
• buy now pay later agreements,
• benefit overpayments, and
• debts to friends and family.

You must still pay:

• child maintenance, or anything you owe under family proceedings,
• student loans,
• budgeting and crisis loans from the Social Fund,
• debts secured against things you own,
• damages for personal injury or death that a court has ordered you to pay, and
• unpaid TV licence fees.

You also still pay your rent and bills while the DRO runs. Creditors in the DRO cannot ask you for payment.

The rules you follow

While you have a DRO, you cannot:

• borrow more than £500 without telling the lender about your DRO,
• write cheques when you do not have enough money to cover them,
• apply for another DRO for 6 years,
• act as a company director, or create, manage or promote a company without the court’s permission, or
• manage a business under a different name without telling the people you do business with.

You must also tell the Insolvency Service if your income goes up, or if you get money or things of value. They will look again at your case. A DRO can be cancelled if your circumstances change.

You may be prosecuted if you break the rules. They can also be extended by 2 to 15 years. Creditors can ask the Insolvency Service to look into you if they think you made your debts worse before you applied, or acted dishonestly.

Your credit file and the public register

• A DRO usually shows on your credit file for 6 years from the date it was approved.
• It is on the Individual Insolvency Register until 3 months after it ends.

When it ends

After 12 months, the DRO ends and the rules stop. You do not have to pay the debts that were listed in it. Keep your paperwork. If you try to get credit or fix your credit file, you may need to show proof that your DRO has ended.

Not sure if a DRO or another option is a better fit? See an IVA and a DRO side by side.