A Debt Relief Order is an alternative to bankruptcy for people with debts of less than £50,000 and less than £75 a month in disposable income.

What is a Debt Relief Order?

A Debt Relief Order (DRO) is a debt solution that allows people with debts up to £50,000 and little income or valued assets, to be relieved from their repayments for 12 months. After this time, if they are still unable to repay, their debts are officially written off. A DRO remains on your credit file for 6 years from the date of approval.

A Debt Relief Order is designed for those living in England, Wales or Northern Ireland who are unable to repay outstanding debts. It offers an opportunity to take a break from repayments, in the hope that their financial situation improves. If you’re based in Scotland, you can’t apply for a DRO order but there are other debt solutions available.

How Does a DRO Work?

While you’re on a DRO, you are given respite from your debt repayments and your creditors aren’t allowed to contact you. All DRO debt is frozen for 12 months and is potentially written off if you’re still unable to make repayments after your DRO has finished.

You’ll need to contact an approved debt adviser to apply for a DRO. Services such as MoneyHelper offer free debt advice or you can get in touch with one of our money experts. Your debt adviser will likely:

• Calculate how much debt you have, as well as any assets and income
• Take a look at payments made to your creditors over the past 2 years
• Ask about possessions you’ve given away or sold in the past 2 years.

If they think you’re eligible for a DRO, they’ll submit your application to the Insolvency Service. If successful, the Insolvency Service will inform your creditors of your DRO.

Who Is a DRO Suitable For?

A DRO may be the right option for you if:

• You have little or no surplus income or assets: DRO applicants typically don’t have any assets worth more than £2,000 or a car worth more than £4,000. They also have a disposable income (after household bills and other necessary payments) of no more than £75 a month.
• You don’t own property: If you own a property, you likely won’t qualify for a DRO. It’s designed for renters or those living with family/friends who don’t have significant assets tied to property.
• You have low debt levels: If you have debts up to £50,000 that you feel you can’t pay back and have little to no assets or property of your own to contribute towards repayments, a Debt Relief Order may be a good option for you.
• You can’t afford a repayment plan: Unlike Individual Voluntary Agreements (IVAs) and Debt Management Plans (DMPs), a DRO requires no monthly payments. There are also no application fees, making it ideal for those who can’t afford a repayment plan.

Key Benefits of a DRO

A Debt Relief Order can be a great solution for people struggling to pay off their debt. Here are some of the benefits of DROs:

• Writes off your debts
  • One of the biggest advantages of a DRO is that it allows you to write off certain unsecured debts after 12 months. This means that if you meet the eligibility criteria and successfully complete the DRO period, the debts included in the order will be completely cleared, and you will not have to repay them. 
• Legal protection from creditors
  • Once a DRO is approved, creditors are legally barred from contacting you, chasing payments, or taking legal action against you for the debts included in the order. This means you won’t have to deal with letters, phone calls, or court threats from them during the 12 month period.
• No application fees
  • Unlike other debt solutions, which can require ongoing payments or expensive legal fees, a DRO doesn’t have any fees, making it a more affordable solution.
• No monthly repayments
  • A DRO doesn’t require any payments towards your debts during the 12-month period. This makes it an attractive option for individuals who have little to no disposable income after covering their basic living costs.
• Quick process
  • A DRO typically lasts for just 12 months, after which your debts could be written off. This is much quicker than some other debt solutions, such as IVAs (which last around five years). After this period, you can start fresh with a clean financial slate.
• Covers multiple debts
  • Since multiple debts can be included in one DRO, it simplifies your financial situation by consolidating all your qualifying debts into a single legal arrangement. A DRO includes a number of unsecured debts,such as: 
    • Credit cards
    • Personal loans
    • Overdrafts
    • Utility arrears (e.g., gas, electricity, water)
    • Store cards
    • Council tax arrears
    • Payday loans.

If you have debts up to £50,000 that you feel you can’t pay back and have little to no assets or property of your own to contribute towards repayments, a Debt Relief Order may be a preferable choice to Bankruptcy.

A DRO may be an option if you feel you lack the resources to enter any other debt solution or feel you need space from your current debts.

DRO vs Other Debt Solutions

There are a number of different debt solutions available. To help you find the right one for you, below is a table comparing their key features.

Debt solution	DRO	IVA	DMP	Debt Consolidation Loan	Bankruptcy
Debt included	Unsecured debt up to £50,000	Unsecured debt	Unsecured debt	Unsecured and secured debt	Unsecured debt
Monthly payments	None	Based on affordability	Based on affordability	Fixed repayments	None, unless you have an IPA or IPO
Length of process	12 months	5-6 years	Depends on repayment speed	Depends on loan term	12 months
Impact on credit score	Stays on credit file for 6 years	Stays on credit file for 6 years	Not on credit file if no missed or partial payments	Not on credit file if no missed or partial payments	Stays on credit file for 6 years
Protection from creditors	Yes	Yes	No	No	Yes
Fees	No fees	Amount varies, included in monthly payments	Amount varies, included in monthly payments	No fees	£680

Explore More About DROs

To find out more about DROs, you can visit the following pages:

Eligibility

To be eligible for a DRO, there are a number of criteria you must meet, including having no more than £50,000 in unsecured debt and £75 in disposable income each month. To check your eligibility, take a look at our dedicated page below.

Applying for a Debt Relief Order

1. Once put forward, a DRO should take up to 10 working days to be officially reviewed.
   
2. After the initial application, you’ll need to review your financial situation. To whom you owe money, the details of your debts, income, and expenditure will all need to be considered. The sooner you give this information the sooner your application can begin.
   
3. Once you’ve entered a DRO, you will have 12 months free from having to make debt repayments. During this period, all charges and interest are frozen and your creditors can’t contact you. Once this 12 months comes to an end, your finances will be reviewed again. If your finances have improved, you will have to start repaying your debts. If your circumstances remain the same, your debts included in the DRO are officially written off.

Am I eligible for a Debt Relief Order?

As a Debt Relief Order is a scheme designed to help people who cannot realistically get out of debt themselves, you will need to meet some qualifying criteria, these include:

• Debts up to £50,000
• Not owning property
• Not owning a vehicle worth more than £4,000
• No assets worth more than £2,000
• Less than £75 a month in disposable income
• A resident of England, Wales, or Northern Ireland
• Unable to repay your debts
• No DRO in the last 6 years
• Not currently in any formal insolvency solution (e.g. IVA or Bankruptcy)

How to apply

When applying for a DRO, there are a number of steps you’ll need to follow, from assessing your finances to contacting a debt adviser. This guide goes through the DRO application process from start to finish.

DRO FAQs

Which debts are included in a Debt Relief Order?

Many different types of unsecured debts are covered under a Debt Relief Order. These include:

• Credit card
• Overdraft
• Overdue utility bills  
• Rent arrears
• Personal loan
• Benefit overpayments
• Council tax
• Telephone and broadband bills.

Can I get a mortgage on a Debt Relief Order?

Getting a mortgage while you’re on a DRO would be a breach of the terms. You would be expected to resume repayments of your existing debts. As with any debt repayment solution, it’s typically advised to wait until your solution has come to an end before you try to access further credit.

Will a Debt Relief Order stop bailiffs?

When you enter a DRO, your creditors must cease any attempts to make contact with you and to chase payments. This includes visits from bailiffs, as well as legal action and any other form of direct contact with you. 

If your financial situation has improved after the 12 months of your DRO, your creditors will be permitted to chase repayments again – applying any charges or interest they previously would have added.

Which debts aren’t included in a Debt Relief Order?

There are a number of debts that aren’t included in a DRO, meaning you’ll have to continue paying them. These include: 

• Child maintenance
• Student loans
• Debt secured against possessions you own
• TV licence fees
• Damages for personal injury or death
• Budgeting and crisis loans. 

Can I get a mortgage on a Debt Relief Order?

Getting a mortgage while you’re on a DRO would be a breach of the terms. You would be expected to resume repayments of your existing debts. As with any debt repayment solution, it’s typically advised to wait until your solution has come to an end before you try to access further credit.

Will a Debt Relief Order stop bailiffs?

When you enter a DRO, your creditors must cease any attempts to make contact with you and to chase payments. This includes visits from bailiffs, as well as legal action and any other form of direct contact with you. 

If your financial situation has improved after the 12 months of your DRO, your creditors will be permitted to chase repayments again – applying any charges or interest they previously would have added.

Should I apply for a Debt Relief Order?

Whether or not you should apply for a DRO will depend on your specific financial circumstances. As outlined above, this debt solution has strict eligibility criteria, so is not available to everyone. 
A DRO might appeal to you because of the prospect of being able to write off debts. However, as with any debt management solution, you should always do your research and contact a debt expert for further assistance.

How We Can Help

When applying for a DRO, you’ll need to contact a debt adviser so they can determine whether it’s the best option for you and submit your applications. MoneyHelper can help you with this and provide free debt advice. Alternatively, you can get in touch with us at MoneyPlus. We can offer expert support and advice, with DROs and other debt solutions.

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