How to get a Debt Relief Order (DRO)
A Debt Relief Order (DRO) is a solution to deal with personal debts you cannot pay. It helps you make a fresh start (with some restrictions).
Applies to England and Wales
Overview
A Debt Relief Order (DRO) is a solution to deal with personal debts you cannot pay.
You apply through an approved debt adviser and have to meet certain eligibility criteria.
A DRO normally lasts 12 months. If approved, you stop making payments towards the debts (and interest) listed in the DRO during that time. After the 12 months, you will not have to pay these debts anymore.
A DRO stays on your credit reference file for 6 years from the date it was approved, which is the same for other debt relief options.
Eligibility
You have to contact an approved debt adviser to apply for a DRO.
The debt adviser will check if you meet the eligibility criteria – free of charge. They will assess your situation and look at your income, debts, and belongings.
Do not worry if you do not know exactly what you owe or what your monthly expenses are. The debt adviser will help you figure this out.
You are eligible for a DRO if you:
- owe less than £50,000 in total
- have savings or valuable items worth less than £2,000 in total
- own a vehicle worth less than £4,000 (if you were to sell it today)
- do not have enough money left at the end of the month to make your debt repayments
- have lived or worked in England and Wales in the last 3 years
- are not currently bankrupt, have an interim order or an individual voluntary arrangement
- have not had a DRO in the last 6 years
If you do not live in England or Wales
You cannot apply for a DRO if you live in Scotland or Northern Ireland. Please speak with a debt adviser to find out what options are available to you.
To apply for a DRO
You have to contact an approved debt adviser to apply for a DRO.
The debt adviser will confidentially go through your situation with you to help you find the best solution. It is free to get help and speak with a debt adviser.
Use the Money Helper website to find more information about organisations who offer free debt advice.
If a DRO is suitable, the debt adviser will complete the application for you. You cannot complete the application on your own. You will not need to go to court.
The debt adviser will help you find other ways of dealing with your debts if a DRO is not suitable.
Cost
You do not need to pay for a DRO – there’s no application fee.
Completing your application
A debt adviser will make sure you meet the eligibility criteria for a DRO.
They will:
- calculate your total debt, the value of your possessions and how much money you have left over each month
- look at the payments you have made to your creditors over the past 2 years
- ask you about any possessions you have given away or sold in the last 2 years
If you are eligible, the debt adviser will complete an online application for you and submit it to the Insolvency Service.
Debts that can be included in a DRO
Debts that can be included in a DRO are called ‘qualifying debts’.
They include:
- credit cards, overdrafts and loans
- rent arrears and utilities (gas, electricity, telephone)
- council and income tax
- buy now - pay later agreements
- benefit overpayments
- debts to friends and family
Once your DRO is approved, you will no longer have to pay the debts (and interest) listed in the DRO anymore.
Debts you will still have to pay
There are some types of debts that cannot be included in a DRO. You’ll still have to pay:
- child maintenance or anything you owe under family proceedings
- student loans
- budgeting and crisis loans from the Social Fund
- debts secured against any possessions you own
- damages for personal injury or death a court has ordered you to pay
- unpaid TV licence fees
Additional eligibility criteria
You must pay off your debts equally. You must not give away or sell any valuable items for less than they’re worth.
A debt adviser will:
- look at payments you have already made to your creditors to be sure you haven’t favoured any creditors over others (preferential payment)
- check if you’ve sold or given away any valuable items you own (undervalue transactions)
Preferential payments and undervalue transactions can affect your eligibility for a DRO.
A debt adviser will let you know if either of these apply to you and if they might affect your application.
After you apply
A debt adviser will send your completed DRO application to the Insolvency Service.
If your application is successful, the Insolvency Service will:
- confirm your DRO has been made
- explain all the restrictions you must follow
- tell you about any actions you need to take
- inform all the creditors listed in your DRO
- add your DRO to the Individual Insolvency Register and remove it 3 months after it ends
Your credit reference file
If your application is successful, your DRO will also be added to your credit reference file.
It will usually show on your credit reference file for 6 years.
This is the standard amount of time that debt relief options and notices show on creditor reference files. For example, if you missed a repayment to a creditor (default notice) it would usually show on your creditor reference file for 6 years.
The DRO period
Once you get your DRO, you stop making payments towards the debts listed in it.
A DRO lasts 12 months. This is called the DRO period. The DRO period can be extended in some cases.
At the end of the period, your DRO is closed and you will not have to pay your debts back.
You do have to keep paying any regular commitments during the DRO period, like rent and bills.
If a creditor asks you for payment
Creditors listed in your DRO cannot ask you to make payments during the DRO period. They can send you statements and general correspondence.
If a creditor asks you for payment, tell them about your DRO and speak with your debt adviser.
If your circumstances change
A DRO is based on your circumstances at the time you apply.
If your circumstances change during your DRO period you must tell the Insolvency Service about any:
- increase in your regular income
- money or possessions of value you receive, such as property or vehicles
The Insolvency Service will reassess how any changes will affect you.
Speak to a debt adviser to find out how any change of circumstances will affect you and if you will still be eligible for a DRO.
Restrictions
Once you are granted a DRO, you will have to follow certain restrictions during the DRO period.
If you apply for an overdraft or a new account you must tell the bank or building society about your DRO.
You cannot:
- borrow more than £500 without telling the lender about your DRO – whether you’re borrowing on your own or with someone else
- write cheques when you do not have sufficient funds
- apply for another DRO for 6 years from the date your DRO is approved
You will not be able to:
- act as a director of a company
- create, manage or promote a company without the court’s permission
- manage a business with a different name without telling anyone you do business with about your DRO
You must not break any of the restrictions
You must not break any of the DRO restrictions and may be prosecuted if you do so.
If you break them, the restrictions can be extended for 2 to 15 years. This extension is called a Debt Relief Restrictions Order (DRRO).
Your creditors can ask the Insolvency Service to investigate and get debt relief restrictions order (DRRO) against you if they believe:
- you made your debt situation worse before you applied for your DRO
- you have acted dishonestly
Speak to a debt adviser or contact the Insolvency Service if you’re unsure about any of the restrictions.
When your DRO period ends
At the end of your DRO period, the restrictions end, and you will not have to pay the debts (and interest) listed in the DRO.
You can check the date your DRO ends using the Individual Insolvency Register.
Keep hold of your paperwork
Make sure you keep all your related paperwork after your DRO period ends.
If you are trying to get credit or update your credit reference file, you might need to show evidence of your DRO and a copy of the official document stating your DRO has ended.
Organisations who can help you get a DRO
- National Debtline
- Citizens Advice
- AdviceUK
- Payplan
- Christians Against Poverty
- Community Money Advice
- Shelter (England)
- Shelter (Wales)
- MoneyPlus Advice
- Money Wellness
Find out more about other options for dealing with your debts
Updates to this page
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Guidance has been updated in line with the DRO threshold increase from £30,000 to £50,000, along with single vehicle value from £2,000 to £4,000.
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Content has been updated to reflect the end of the £90 fee DRO application fee on 06 April 2024.
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Added clarity to the section: "Debts you will still have to pay" regarding damages ordered by a court for personal injury and death.
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First published.