Options for paying off your debts
5. Debt Relief Orders
Debt Relief Orders (DROs) are one way to deal with your debts if you owe less than £20,000, don’t have much spare income and don’t own your home.
If you get one:
- your creditors can’t recover their money without the court’s permission
- you’re usually freed (‘discharged’) from your debts after 12 months
Get a Debt Relief Order
You get a DRO from the official receiver, an officer of the bankruptcy court, but you must apply through an authorised debt adviser. They’ll help you fill in the paperwork.
There’s a list of organisations that can help you find an authorised debt adviser in the guide to DROs.
The Money Advice Service has information about where to get free debt advice.
The official receiver’s fee is £90. Your debt adviser can tell you how and when to pay it. In some cases a charity may be able to help you with the cost - ask your debt adviser.
You’re generally eligible if you meet all of these criteria:
- you owe less than £20,000
- you’ve less than £50 a month spare income
- you’ve less than £1,000 worth of assets
- you’ve lived or worked in England and Wales within the last 3 years
- you haven’t applied for a DRO within the last 6 years
You must follow rules called ‘restrictions’ if you get a DRO.
This means you can’t:
- borrow more than £500 without telling the lender about your DRO
- act as the director of a company
- create, manage or promote a company without the court’s permission
- manage a business without telling those you do business with about your DRO
If you want to open a bank account, you may also have to tell the bank or building society about your DRO.
Check the Individual Insolvency Register to see when the restrictions end.
The restrictions usually last 12 months. They can be extended if careless or dishonest behaviour caused your debt problem. For example, you lied to get credit.
The official receiver will tell you if they should be extended. To extend them, you’ll be asked to agree to a ‘Debt Relief Restrictions Undertaking’. The court can issue a ‘Debt Relief Restrictions Order’ if you don’t agree.
What you need to know
While you have a DRO you still have to pay:
- your rent and bills
- certain debts, eg student loans, court fines
DROs can be cancelled if:
- your finances improve
- you don’t co-operate with the official receiver - eg you don’t give them the information they ask for
If you get new debt after your DRO is approved you could:
- get a bankruptcy order
- be prosecuted if you don’t tell new creditors about your DRO
Your DRO is added to the Individual Insolvency Register - it’s removed 3 months after the DRO ends.
Your DRO will stay on your credit record for 6 years.