Guidance for creditors listed in a Debt Relief Order (DRO)
What you need to know if you are a creditor with a debt listed in a Debt Relief Order (DRO).
Applies to England and Wales
We have other guidance if you are:
- an individual and need information on applying for a DRO
- a debt adviser and need information on completing a DRO application
How a DRO affects debt repayments
A DRO is an option for individuals who cannot afford to pay back their debts. A DRO normally lasts 12 months (called the DRO period).
As a creditor listed in a DRO, you cannot take action to recover the debts (and interest) listed in the DRO during that time.
At the end of the DRO period, the individual is ‘discharged’ from their debts. This means the debts are written off and will not be paid back to you. You will not be able to legally recover the money you are owed.
DROs only cover certain types of debt. Find out more about what debts a DRO does not cover (money you can get back).
How we tell creditors about a DRO
We will send you a letter if you are a creditor with a debt listed in a DRO. This is called the DRO notice. It will include a copy of the DRO with details of all debts listed in it.
If an individual that owes you money informs you they have a DRO but we have not sent you a letter, contact the DRO team to request a copy.
You can also check the Individual Insolvency Register. Everyone with a current DRO will be listed in the register. Their details will remain on this register for 3 months after their DRO has ended.
We do not contact you to let you know when a DRO has ended.
We will contact you and let you know what happens if we cancel a DRO early or if we extend a DRO.
Your responsibilities and restrictions during a DRO
When you receive a DRO notice you must stop:
- requesting payments from the individual named in the DRO
- any proceedings against them
- all bailiff enforcement action
- all recovery action if the debt is under a collection agent
- any attachment of earnings deductions (court ordered deductions from an individual’s wages to pay their debts)
You can continue to provide statements to the individual and can send a default notice.
You cannot start insolvency proceedings against someone in a DRO without a court’s permission. There are some exceptions, such as debts under a controlled goods agreement.
Money you cannot get back
At the end of the DRO period, the debts listed in it are ‘discharged’.
This means that the debts are written off, and the individual will not pay the debt back to you. This includes any interest and penalties they incurred since the DRO approval date.
Rent arrears are a debt an individual can include in a DRO. However, you can start or continue possession action during the DRO period.
If the individual has a debt management arrangement in place, this will end when the DRO is made. You will no longer be able to recover the amount due under an arrangement.
Debt management arrangements include:
- a County Court Administration Order
- a debt repayment plan
- an enforcement restriction order
Money you can get back
Fraudulent debts (debts due to fraud)
Debts owed as a result of fraud or a fraudulent breach of trust may be listed in a DRO. This means that any recovery of the debt should stop during the DRO period.
However, fraudulent debts will not be discharged at the end of the DRO. The individual will still have to pay them back when the DRO period ends.
The Insolvency Service is not able to say if a debt is fraudulent. This is a matter between the creditor and the DRO applicant. You may need independent legal advice if you and the DRO applicant disagree about a debt being fraudulent.
Controlled Goods Agreement
A Controlled Goods Agreements (CGA) is a contract between an individual and a bailiff. An individual keeps possession of goods but must make repayments to prevent them being taken away.
A CGA is not affected by a DRO. An individual with a DRO must continue to make payments towards a CGA during the DRO period. If they do not keep up payments, you have the right to take the goods away.
Debts left out
The individual must continue to make payments towards debts not listed in a DRO. You can legally recover this money owed to you.
Joint debts
A DRO does not clear the debt for a joint debt holder or a guarantor of a debt. The DRO protections only apply to the individual named in the DRO.
You can still recover money you are owed from a joint debt holder (this includes joint bank accounts) or from a guarantor during the DRO period.
Debts that do not qualify
Some debts do not qualify to be listed in a DRO (excluded debts).
These include:
- student loans
- criminal or civil court fines
- TV licence
- child maintenance
- damages for personal injury
If an individual owes you money for a debt that does not qualify to be listed in a DRO, they must continue to make payments towards it.
If you’ve been told that your debt is listed in a DRO but you can show it does not qualify, contact dro.unit@insolvency.gov.uk.
VAT relief
You might be able to claim relief from VAT if you’re VAT registered and you have supplied goods or services to a customer without being paid.
Object to a DRO
You can only make a formal objection to a DRO if you can show the individual does not meet the eligibility criteria.
An individual is eligible for a DRO if they:
- owe less than £30,000 in total
- have savings or assets worth less than £2,000 in total
- own a vehicle worth less than £2,000
- do not have enough money left at the end of the month to make their debt repayments
- have lived or worked in England or Wales in the last 3 years
- do not have a current bankruptcy order, individual voluntary arrangement or interim order
- have not had a DRO in the last 6 years
You must object within 30 days of receiving a DRO notice by sending an email to DRO Objection Team.
You will need to include:
- your name and address
- the individual’s name
- the DRO reference (DROXXXXXX)
- your reason for objection
- any evidence
We cannot consider an objection if you do not send us evidence to support your case. We may cancel a DRO if we agree with your objection.
Update incorrect information in a DRO
You can only update incorrect information in a DRO during the 12 month DRO period.
To be eligible for a DRO, an individual must have debts less than £30,000.
Contact the DRO Unit if you think the individual has not included any debts which may take them over the £30,000 debt limit.
We especially need to know if you’re owed more than what is listed in the DRO.
Send us proof of the correct debt amount for the date when the DRO order was made. We will update the DRO based on this information.
If the individual’s updated total is more than £30,000, we can cancel the DRO.
You do not need to let us know if you’re owed less than the amount listed in the DRO.
A lower amount does not affect the individual’s eligibility for a DRO.
If your name or details are incorrect, contact the DRO Unit during the DRO period with your proof of the debt.
An individual can also correct errors in a DRO. You will be informed if they amend the debt amount owed to you.
When the length of a DRO might change
We can:
- cancel a DRO early
- extend a DRO for 3 months
We will write to you if the DRO period is extended or if it ends early.
We do not write to you if a DRO ends as planned after 12 months.
If a DRO is cancelled
The individual named in a DRO must follow certain restrictions and requirements during the DRO period.
We can cancel the DRO early if:
- they do not follow the restrictions
- they stop meeting the eligibility criteria
If the DRO ends early, the individual will no longer be discharged from their debts and they will need to pay these back. This means you can recover the money you’re owed.
When a DRO period can be extended
A DRO period can be extended. The extension must be issued by a court and is called a Debt Relief Restrictions Order (DRRO).
It will not affect these debts being written off at the end of the original 12 month DRO period.
A DRRO can be made against an individual if they are found to have:
- been dishonest before applying for a DRO
- broken the rules when they applied or during the DRO period
A DRRO lasts between between 2 and 15 years. During this time, the individual has to continue to follow their DRO restrictions along with some additional rules.
Report an individual for misconduct
Individuals must follow certain restrictions during a DRO.
Contact the DRO Unit if you can show that:
- the individual has been dishonest or broken the restrictions
- their dealings or property need looking into
Some examples of breaking the restrictions include where an individual:
- takes out credit shortly before applying for a DRO, with no intention to repay the debt
- makes excessive pension contributions
- makes payments to creditors that puts those creditors in a better position than others in the last 2 years (preferential payment)
- does not tell us about assets they own
- sells their assets undervalue in the last 2 years (giving away or selling goods or property for less than their true value)
- fails to provide goods or services when they have been paid for them
This is not a full list of misconduct.
Once you submit a report
We will look at any evidence you have and decide whether further action should be taken or not.
We may investigate the matter ourselves to decide whether to revoke or amend the DRO and if other steps should be taken, such as applying for a DRRO.