DRO (Debt relief order)
A debt relief order (DRO) allows you to freeze your debts for 12 months. If your circumstances haven’t changed after this time, your debts will be written off.
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What is a debt relief order?
A debt relief order (DRO) is a way to deal with your debts if:
- you owe £50,000 or less
- you’re not a homeowner
- you don’t own other things of value
- you have very little spare money at the end of the month.
A DRO lasts for 12 months. If your situation doesn’t improve during that time, your debts are written off.
During your debt relief order creditors aren’t allowed to chase you to pay. If it’s the right option for you, we’ll make an application to the Insolvency Service on your behalf.
Most non-priority debts can be included in debt relief order. A debt is classed as either priority or non-priority depending on how serious the consequences are if you don’t pay.
The consequences of not paying non-priority debts are less serious than for priority debts. Despite being less serious, your creditors could still take you to court or arrange for bailiffs to visit you.
The main non-priority debts that can be included in a DRO are:
- Credit Cards
- Payday Loans
- Store Cards
- Overdrafts
- Personal Loans
- Lines of Credit
It's free to apply for a debt relief order. There used to be a £90 fee but that was scrapped on 6 April 2024.
A debt relief order might be right for you if:
- you can’t afford to pay your debts
- you owe less than £50,000
- you don’t own your home or anything else of much value
- you have £75 or less a month left after you’ve covered the essentials
If we are unable to help you with all of your debts, or for further information and support to help you with your money troubles, please visit MoneyHelper.
Is a DRO right for me?
If all of the following statements are true, you may well be able to get a debt relief order:
I can’t pay my debts
I owe less than £50,000
I’m not a homeowner
I haven’t had a DRO in the last six years
DRO benefits & things to consider
There’s a lot to think about when you’re considering a DRO. To help you decide if a DRO is right for you, we’ve outlined the main benefits and things to bear in mind:
Your unsecured debts (credit cards, loans, overdrafts etc.) are frozen for 12 months.
Your lenders are not allowed to chase you for payment.
Your debt is written off after 12 months if your situation doesn’t improve.
There are no fees for a DRO.
We’ll need to check if a DRO is suitable. If not, we’ll suggest other ways to deal with your debt.
Your credit rating will be affected for six years.
If your financial circumstances improve during the 12 months, your DRO will end and you’ll need to make arrangements to repay your debts.
Expert verdict: DROs can be life changing
Many people don’t know about debt relief orders. For those that qualify, it can be life changing to have their unaffordable debt written off.
Katrina – Debt advice specialist
Money Wellness
Steps towards a DRO
1. Advice
One of our friendly advisers will ask you for all the information they need to assess your situation.
2. Options
They’ll explain your options and help you decide if a DRO is right for you.
3. Proposal
If a DRO is right for you, we’ll prepare your application together and send it to the Insolvency Service.
4. Setup
If your DRO is accepted, your lenders will be unable to chase you for payment for 12 months.
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FAQs
After you’ve given us all the information we need, we’ll submit your DRO application. The Insolvency Service will make a decision within ten working days (two weeks).
There is no income limit for a debt relief order. The key figure is the amount you have left over each month after you’ve paid all your essential household expenses. You won’t qualify for a DRO if you have more than £75 a month spare.
A debt relief order lasts for 12 months. This period is known as the ‘moratorium’. During that time, you don’t make any payments towards the debts included in your DRO and your creditors can’t chase you to pay.
If your situation doesn’t improve during the 12 months, those debts are written off, meaning you don’t have to pay them back.
For most people, a debt relief order shouldn’t affect your job. But if you work in finance or law, your employment contract may prevent you keeping your job if you become insolvent, and a DRO is a type of insolvency. Public service jobs, such as the army or police, may also be affected (although this is less common these days).
It’s a good idea to check your contract though, as it may depend on how long you’ve been in your role and whether you handle finances. There are also some professional or licensing bodies that won’t allow you to renew your membership if you’ve been made insolvent.
You won’t be able to get a debt relief order if you have a mortgage, as you can’t get one if you’re a homeowner. Taking out a mortgage while you have a DRO won’t be an option either.
A DRO usually lasts for 12 months. After that time, you could in theory get a mortgage. But a DRO stays on your credit file for 6 years from the date it was made. During this time, you will struggle to get a mortgage from a mainstream lender. It may be possible to get one from a lender who specialises in mortgages for people with a poor credit history, but these are likely to be an expensive option.
If you want to take out a mortgage within the next six years, a DRO is probably not the right solution for you.
You’ll need to provide information about your financial situation to help us complete your debt relief order application. To begin with, we’ll ask you about the money you have coming in, your essential costs and your debts. You’ll need proof of these amounts, so it’s helpful to collect as many documents as you can in advance. The documents you might need include:
-
wage slips
-
benefit award letters
-
utility bills
-
council tax letter
-
bank statements
-
recent statements from your creditors
Once we have all the information we need, we’ll submit your DRO application. The Insolvency Service will make a decision within ten working days (two weeks).
During your DRO, a creditor is only allowed to take action against you under very limited circumstances.
One set of circumstances where a creditor can continue action against you is if you’ve made a payment arrangement with a bailiff e.g. a controlled goods agreement. If you’ve made this sort of arrangement with a bailiff, your debt relief order won’t stop them from taking and selling your belongings. You’ll need to carry on making the payments you’ve agreed to if you want to keep your possessions.
But don’t take our word for it...
Learn more about DROs
There’s a lot to think about when you’re considering a debt relief order and you’ll probably have a lot of questions. We’ve put together some guides that we hope will answer those questions. If you can’t find the information you’re looking for, get in touch and we’ll be happy to help.
What is a DRO & how does it work?
How long does the DRO process take?
A wide range of debt solutions and services
It may be that a debt relief order isn’t quite right for you and another debt solution is more suitable. We’ll make sure we recommend the one that’s best for your individual circumstances and your long-term financial wellbeing.
You can find more information below on alternatives to a DRO.
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