Home » Debt solutions » Debt Relief Order (DRO)

What is a Debt Relief Order?

A Debt Relief Order (DRO) is a debt solution that allows people with debts up to £30,000 (£20,000 in Northern Ireland) 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 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.

Is a Debt Relief Order right for me?

A Debt Relief Order is a scheme designed for people who possess little, or no assets or surplus income, with which to contribute towards debt repayments. People applying for a DRO typically don’t own property, a car, or have any assets worth over £2000. They will also have a disposable income (after household bills and other essentials) of £75 or less per month.

A DRO can be seen as an alternative to bankruptcy. Once entered, all interest and charges from your creditors are frozen over a 12-month period. By the end of your DRO, your financial situation will be reviewed and if improved, you will be expected to begin making repayments toward your debts again. If your situation hasn’t improved, your debts will be written off.

When should I consider a Debt Relief Order?

If you have debts up to £30,000 (£20,000 in Northern Ireland) 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.

What debts are included in a Debt Relief Order?

Almost all 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                            

Debt Relief Order Pros & Cons

DRO Pros

  • Potential to write off debts
  • 12 months respite from your debt repayments
  • Creditors cannot contact you during the 12 months
  • You don’t need to appear in court

 DRO Cons

  • You will need to pay a £90 fee
  • Not available if you own property
  • Your credit rating will be affected
  • Only available if you owe less than £30,000 (£20,000 in Northern Ireland)

Applying for a Debt Relief Order

  1. Applying for a Debt Relief Order will require an initial nominal fee of £90 to be paid to the Insolvency Service. This payment can be made in increments, however, it will need to be paid in full for your application to progress. Once put forward, a DRO should take up to ten working days to be officially reviewed.
  2. After the initial application, you’ll need to review your financial situation. To who 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 have entered your Debt Relief Order, you will have a 12-month period free from your current debts. During this time, all interest and charges are frozen, and your creditors will be unable to contact you. At the end of the 12-month period, your financial situation will again be reviewed. If your financial situation remains the same, your debts will be written off. If your finances have improved over the DRO, you will be expected to begin repaying your debts.

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 £30,000 (£20,000 in Northern Ireland)
  • Not owning property
  • Not owning a vehicle worth more than £2000
  • No assets worth more than £2000
  • 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 six years
  • Not currently in any formal insolvency solution (e.g. IVA or Bankruptcy)

I was amazed at how easy it was to talk to a stranger about my debt.

— Kevin, Greater London
Read Kevin’s story…

Living with a Debt Relief Order

A Debt Relief Order is recorded on a public register. Once on a Debt Relief Order, you will be given some much needed breathing space from your debts and creditors, giving you a 12 month period to get ahead of your debts, either giving you the opportunity to improve your financial situation or to be free from debts you cannot afford to repay.

Similarly to most debt solutions, a Debt Relief Order will have implications on your ability to take out future loans and your credit score.

Can I get a mortgage on a Debt Relief Order?

Getting a mortgage while on a Debt Relief Order would breach your DRO terms, and you would be expected to resume repaying your prior debts.  

As with all debt repayment methods, it’s generally advised to wait until your solution has ended before attempting to take on further credit.

Will a Debt Relief Order stop bailiffs?

Once a Debt Relief Order is entered, all contact from creditors and attempts to receive repayments are ceased. This includes bailiff visits, legal action, and any direct contact with you.

During your DRO, you will no longer need to interact with your creditors directly. Should your financial situation not improve after the 12 months of your Debt Relief Order, your debts will be written off. If your finances do improve, or you go above any of the criteria thresholds, your creditors will be able to contact you for repayments again. Applying any interest or charges they previously would have.

Should I apply for a Debt Relief Order?

As outlined above, a Debt Relief Order is a debt solution with strict eligibility criteria. Similar to an Individual Voluntary Arrangement (IVA), the prospect of being able to write off debts may make a DRO the preferred option. As with all debt management solutions, we advise due diligence and research. It is always best to contact an FCA regulated debt advice company, such as MoneyPlus Advice, before going ahead with any debt solution. We offer expert debt advice and can discuss the best options for you.

Are you struggling with debt?

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To find out more about managing your debt and receiving free debt advice visit www.moneyhelper.org.uk or read Options for paying off your debt.