Here's what you need to know about debt relief orders (DROs).
What is a DRO?
A DRO is one way to deal with your debts if you don’t own your own home, don’t have much spare income, and your debts are £20,000 or less. Some types of debt don’t count towards this limit, so check whether you're eligible before you decide.
If you're unsure about whether a DRO is right for you, including whether you're eligible, speak to a DRO adviser. You can find a DRO adviser at most Citizens Advice Bureau's.
While a DRO is in force, you don't have to make payments towards most types of debt included in your DRO and your creditors can’t force you to pay off the debts. At the end of the DRO period, usually around a year your debts will be written off, you’re still responsible for paying off any that aren’t included in the DRO - this is because DROs don't cover all debts.
How do I apply for a DRO?
When applying for a DRO, be mindful that there's a fee of £90. If you can't afford to pay the fee you may be able to get help towards the cost from a charity. You have to go to a DRO adviser, also called an approved intermediary, because you can't submit your own application. You can look for a charity to help with the cost of fees on the
You may be able to get a DRO if all of the following things apply to you: Turn2us grant search tool to see what you can apply for.
- Your debts are worth up to £20,000
- You’ve got £50 or less left over each month after you’ve paid your usual household expenses
- You don’t own your home
- Other savings or things of value you own, called assets, are worth less than £1,000 (some assets are ignored when working out the value)
- You don’t own a car worth £1000 or more, unless it’s one that’s been specially adapted because you have a disability
- You haven’t had a DRO in the last six years and aren’t going through another formal insolvency procedure, such as bankruptcy or an individual voluntary arrangement (IVA)
- You've lived, had a property, or worked in England or Wales in the last three years
What should I be mindful of?
If you're applying for a DRO, you should be mindful of the following things.
If you've done any of the following in the two yearsbefore your application, you must declare it:
- If you have given away any of your belongings
- If you have sold belongings for less than their value, for example: if you sold a car worth £2,000 to a friend for £200
- If you have prioritised paying back one creditor over others, for example: if you paid off a debt you owed to a relative and didn't pay your other creditors
- Your DRO application may be refused if any of these apply to you, although the official receiver could still make a DRO. They will look at the facts of your case before making a final decision.
Debts that can go into a DRO are called qualifying debts. They include:
- Credit cards, overdrafts and loans
- Arrears with rent, utility bills, telephone bills, council tax and income tax
- Benefits overpayments
- Hire purchase or conditional sale agreements
- Buy now - pay later agreements
- Business debts
If you obtained any of these by fraud, you will still have to pay them when the DRO has ended.
If you're behind on your rent, your landlord can still take action to get their property back, even if the rent arrears are included in your DRO. This means you may have to continue paying these after a DRO is made.
Debts that can’t go in a DRO are:
- Magistrates court fines and confiscation orders - these are fines relating to criminal activity
- Child support and maintenance
- Student loans or social fund loans
- Compensation for death and injury
If you’re unsure whether a debt would be covered by a DRO, check with your DRO adviser.
Is a DRO right for you?
A DRO can provide a way out of debt. However, getting a DRO will have an impact on your lifestyle and credit rating. So, if any of your debts are for goods bought on hire purchase, you may need to give the goods back. Other impacts include:
- Credit Record - your DRO will stay on your credit record for six years. This may make it difficult for you to get credit or find a new home in the future.
- Certain Rules - you’ll also have to follow certain rules, called restrictions, during the DRO year, which means you can't borrow £500 or more without telling the creditor about the DRO
- Limited Companies - you can’t get involved in promoting, managing or setting up a limited company, or be a company director, without getting permission from the court
- Sharing - if you have a business under a different name from the one under which you got the DRO, you’ll have to tell everyone you do business with the name you used when you got the DRO
- Clarity - while the DRO is in force, and for three months afterwards, your details will appear on the Insolvency Service’s Individual Insolvency Register, which can be viewed by anyone. If having your name on the register could lead to violence against you or a member of your family, you can ask the court to order that your name doesn't appear on the register
It's important to make sure you understand the impact a DRO will have on all areas of your life before you apply.
How do I get a DRO?
If you think you may be eligible and that a DRO is right for you, you must find a DRO adviser. If they can confirm that you are eligible, you can work them to make your application. You must pay a fee and then wait for the Official Receiver to tell you whether your application's been successful.
What happens when a DRO is made?
When a DRO is made, you enter a DRO period, which is normally a year. You may hear this called the moratorium. During this time there are certain restrictions on what you can do.
What happens if your DRO application is successful?
If your DRO application is successful, the official receiver will:
- Send you a notice to say that the DRO has been made and outlining all the duties and restrictions that will be imposed on you while it is in force
- Send a notice of the DRO to each of the creditors owed a debt that the DRO covers
- Add an entry to the Electronic Individual Insolvency Register (EIIR) showing your details and the fact that a DRO has been made against you. If having your name on the EIIR could lead to violence against you or a member of your household, you can ask the court to order that your name doesn't appear on the register
What will I need to keep paying during the DRO period?
The DRO period normally lasts for a year. During the period of your DRO you don't need to make any payments towards the debts listed in the order. The creditors of those debts won't be able to take any action against you. There are, however, some exceptions to this, which are:
- Rent - payments to your landlord for rent arrears. Having a DRO won't stop them from taking possession action against you, so if you want to stay in the property you may need to continue paying any arrears after the DRO is made payments to bailiffs, also called enforcement agents, who have taken control of your belongings through a controlled goods agreement. Having a DRO won't stop them from taking your belongings and selling them, so if you want to keep them you will have to keep paying the debt.
- Household Expenses - you'll also need to carry on paying your normal household expenses during the DRO period. These may include ongoing, such as: rent, council tax, gas and electricity bills, and water charges.
- Outstanding - you'll also need to keep paying off any debts that aren't included in the DRO
What am I not allowed to do during the DRO period?
During the DRO period there are certain things you won't be able to do. These are called restrictions and include:
- Credit - getting credit for £500 or more without telling the lender you have a DRO
- Business - carrying on in a business in a different name from the one under which you were given the DRO, unless you tell everyone you do business with the name in which you got the DRO
- Limited Companies - being involved with promoting, managing or setting up a limited company without permission from the court acting as a company director without permission from the court
If you don't follow these restrictions you will be committing an offence. This could lead to you being fined or even sent to prison. If the official receiver finds out you've broken any of the restrictions or have been dishonest in your application, they can also ask the court to make a debt relief restrictions order against you. This would mean the restrictions could be extended for up to 15 more years. However, the DRO period will still end after twelve months.
What happens if your circumstances change?
If your circumstances change during the DRO period, you must tell the official receiver. These changes may include:
- Wrong Details - anything which you realise is wrong on your application or you missed out from the information you gave any increase in your income
- Additional Money - any additional money or valuables that you acquire, such as money left in a will
If you fail to tell the official receiver of a change in circumstances like these, you will be committing an offence. This could lead to the DRO being taken away from you and would mean you would have to deal with your debt situation in a different way. It could also lead to a debt relief restrictions order made against you, and could result in you being fined or even sent to prison.