A debt relief order

What is a debt relief order?

A debt relief order (DRO) is a form of simplified bankruptcy to enable people with relatively small amounts of debt and income and almost no assets to write off their debts. A DRO is made by the official receiver from the UK Government’s Insolvency Service. You can only apply for a DRO through approved intermediaries — authorised debt advisers who assist individuals with the completion and submission of a DRO application. DRO lasts for one year, and once it has ended you are released from your debts (with some exceptions).

Key characteristics

A DRO is available to people who are struggling to pay their debts of no more than £15,000, whose assets are no more than £300 and whose disposable income, after deducting normal household expenses, no more than £50 per month. Certain assets are excluded from the calculation, for example clothing, furniture and a vehicle worth less than £1000. There is a fee of £90 payable to an approved intermediary. The application is then considered by the official receiver from the UK Government’s Insolvency Service.

Advantages

  • Your debts included into the DRO will be written off at the end of it. There are a few exceptions, see below.
  • Creditors listed in the DRO application can’t take further action against you without the court’s permission.
  • You can make a fresh start after one year.
  • It only cost £90.
  • You can keep your belongings and a cheap car.

Disadvantages

  • A DRO is entered on a public register.
  • You can’t have a DRO if you are bankrupt or subject to bankruptcy restrictions, have an individual voluntary arrangement (IVA) in place or you have had a DRO in the last 6 years.
  • You won’t be able to have a DRO if you own a house, even if the outstanding mortgage balance is higher than the house market value.
  • You still need to pay some of the debts – in particular student loans, court fins, debts arising from family proceedings, child maintenance, social fund loans and fraud-related debts.
  • Your employment may be affected.
  • Your DRO could be cancelled if you don’t co-operate with the official receiver.
  • You can’t act as a director of a limited company or be involved in its management.
  • You can’t get credit over £500 without telling the lender about your DRO.
  • If you have obtained debts knowing you can’t pay them (culpable or irresponsible actions) or have been reckless (for example gambling) or dishonest (involved in fraud), you may have a debt relief restriction order (DRRO) made against you for 2 to 15 years. The DRRO will not extend the term of your DRO but will mean that for a period of between 2 and 15 years certain restrictions will apply.

How we can help

We can provide general information on DRO. You can only apply for a DRO through an authorised debt adviser (an approved intermediary). The following are competent authorities who are able to direct you to an approved intermediary:

The National Association of Citizens’Advice Bureaux

StepChange Debt Charity

Baines & Ernst Ltd

Institute of Money Advisers

National Debtline

Totemic Ltd trading as Payplan

Insolvency Practitioners Association

AdviceUK

Shelter

Christians Against Poverty

All About Money

Debt Release Direct Ltd

Further information:

The Insolvency Service booklet «Guide to Debt Relief Orders»

Contact us now

By submitting your details you are accepting our

privacy policy

Follow us

Subscribe to our newsletter


By submitting your details you are accepting our privacy policy


Quick links

About us
Contact
Bankruptcy Q and A
Our Fees

Key information about our services and fees:

We can only assist people who already live in England and Wales or who are going to relocate to England and Wales.

If you have debt problems there are various options available to help you make an informed choice. We can provide information and advice in relation to debt solutions available in England and Wales. There is no charge for the initial financial review and initial advice over the phone. However, if you decide to go ahead with our bankruptcy assistance service fees will be payable. Click here for further details on our fees.

You have a 14 days cooling off period from the commencement of our service. If you decide to cancel the service during this time, we will refund you any fees paid to us by you for the service.

If you are made bankrupt, your property and assets could be at risk and your credit rating will severely be affected for six years. Click here for details on bankruptcy restrictions.

For further information about bankruptcy we recommend the Insolvency Service’s booklet “Guide to bankruptcy”. The Insolvency Services also produces a guide which explains the various debt solution options. You can read it here: “In Debt? Dealing With Your Creditors”.

If you wish to know where to get free debt counselling and debt management services you should contact the Money Advice Service.