Debt Relief Orders (DRO)

Debt Relief Order

A debt relief order (DRO) is one of the debt solutions available to you, if you have a debt of £30,000 or less, your maximum disposable income is £75, and you do not have assets (including property and vehicles) or savings and investments worth more than £2,000.

Debt relief orders were introduced by the UK parliament as a new form of bankruptcy for people with minimal assets and an outstanding debt back in 2007. Since then, DROs have been used by thousands of struggling borrowers in England, Northern Ireland and Wales.

As with most debt solutions, applying for a debt relief order has certain merits and drawbacks. Whether or not a DRO is suitable for you depends on your personal circumstances and financial situation. That is why it is important to get debt help before you go for a debt relief order.

At MA, we are committed to helping individuals regain control of their finances. Our team will assess your circumstances and provide you with valuable information to help you decide whether a DRO would suit your requirements. Before that, let’s understand what a debt relief order is and what it can do for you.

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What is a Debt Relief Order?

A debt relief order is a relatively new form of insolvency for people who do not have much in the way of a disposable income and have been unable to pay off relatively low debts (up to £30,000). After a DRO is approved and completed, all included debts are written off.

If your DRO is approved and binding, your debt repayments and total accumulated interest would freeze for 12 months. If your financial circumstances have not improved after a year has elapsed, all your included debts would be written off.
DROs are only available if you are residing in England, Wales or Northern Ireland, or have run a business in one of those countries in the last 3 years. If you are a resident of Scotland, you may want to research other debt solutions available to you.

How Does a Debt Relief Order Work?

Once a debt relief order is agreed on by creditors (people you owe money to), all your debt, interest payments and additional charges will freeze for at least a year. Simply put, you will not be required to repay your lenders. This would provide you with a measure of relief and keep your debt from accumulating.

After 12 months, if your situation has not improved and you are still not able to repay your debts, all including unsecured credit will be written off. However, a DRO is recorded on your credit report for 6 years.

During the 12 months, if your situation has improved enough that you can make contributions towards your creditors, the Official Receiver could stop or revoke your DRO. If you do not tell the Official Receiver of changes to your circumstances, this is an offence that could lead to a restriction order being made against you which could be in place for up to 15 years.

Remember, your lenders are more likely to agree to a DRO arrangement if they are convinced that you will never be able to pay your outstanding debts. A debt relief order can be negotiated only through an experienced debt expert. This person serves as an ‘approved intermediary’ in the exchange.

Debts Included in a Debt Relief Order

You would need to declare all your debts before taking out a debt relief order.
Once your DRO is in effect, you cannot include more debts in it. So, if you forget to include a debt in your debt relief order before it is finalised, you will have to pay it yourself and that can add to your financial distress.
In some cases, a DRO may even be nullified if a borrower forgets to include a debt in it. This is more likely to happen if the total debt (after including the forgotten debt) exceeds the maximum debt limit of £30,000.

Since such mistakes can be very costly for someone who is already struggling to repay their debt, it is a good practice to work with a debt expert and list all your debts before finalising your DRO.
Debts that can be included in a debt relief order are called ‘qualifying debts.’ Qualifying debts include:

  • Credit Cards
  • Loans
  • Catalogues
  • Arrears with Council Tax, Income Tax, National Insurance Contributions
  • Arrears with Rent, phone bills, and utilities like gas and power
  • In-store credit agreements
  • Hire purchase or conditional sales agreements (scroll down for details)
  • Informal loans from friends and family
  • Benefit overpayments unless they were fraudulent

Debts Not Included in a Debt Relief Order

Like most debt solutions available in the UK, debt relief orders only cover certain types of debts. The debts that will not be written off under a debt relief order are called ‘excluded debts’.

You will need to pay excluded debts yourself. Excluded debts include:

  • Educational Loans such as student loans
  • Magistrate’s court fines
  • Criminal fines
  • Confiscation orders
  • Child maintenance or child support dues
  • Child Maintenance Service Arrears (CSAs)
  • TV licence arrears
  • Social Fund loans
  • Personal injury liability ordered by a court

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Hire Purchase Items and Debt Relief Order

Items bought as hire purchase or conditional sales agreements are not in your legal ownership until you pay for them in full. In some cases, if you are taking out a debt relief order, you may have to return the items you’ve purchased or shift the title of their ownership to someone who can afford to make payments on your behalf.
However, there are exceptions to this rule. You can keep some of the items you’ve bought under hire purchase agreements and resume your payments as usual if:

  • The goods you bought are deemed ‘essential’ like household appliances you cannot do without
  • You have no arrears and have made all the payments on time in the past

Debt Relief Order Pros & Cons

Debt relief orders work for some people but maybe an expensive option for others. Whether they will suit you depends on your level of debt and financial circumstances.

Before entering a DRO it is vital to weigh up its pros against its cons. A debt expert can help you with the process and offer all the debt advice you need to make this decision.

Positives of Debt Relief

  • An affordable solution, the application fee is £90, which can be paid in instalments.
  • DRO will protect you from enforcement/legal actions by your creditors
  • With an approved DRO, you won’t have to go to the court
  • If you meet a certain criterion, you won’t have to sell your car or other assets
  • At the end of the DRO, all included debts will be written off

Negatives of Debt Relief

  • If you own a house, you are ineligible, even if the house is in negative equity
  • DRO can have restrictions on your income, job and assets
  • You’ll still have your name published on a public register
  • A debt relief order will impact your credit report negatively for at least 6 years
  • You will have to disclose your DRO if you are borrowing £500 or more to avoid legal repercussions

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Eligibility Criteria for a Debt Relief Order

Debt relief orders are specially designed for individuals with a low amount of debt and lower-income levels. To apply for a debt relief order, however, you need to meet a strict eligibility criterion.

You Are Eligible for a Debt Relief Order If

  • your total qualifying debts are less than £30,000
  • the total worth of your assets and savings does not exceed £2,000
  • you have £75 or less in the way of disposable income after you pay your household bills
  • you have lived, owned property or a business in the last three years in England, Wales or North Ireland

You Are Not Eligible for a Debt Relief Order If

  • you have been issued a Bankruptcy Restriction Order or Undertaking
  • the people you owe money to have already applied to make you bankrupt but the hearing is pending (unless your creditors agree to you availing a DRO)
  • you are presently bankrupt
  • you have been issued a Debt Relief Restriction Order or Undertaking
  • you have had a debt relief order in the last six years

Recent Activity

In order to apply for a debt relief order, you will need to work with a special DRO advisor who will assist you with paperwork and forward your application to the relevant authorities. The assigned DRO advisor will be privy to the entire process so you need to be honest with them.

To secure a debt relief order, you are required to disclose information to your DRO. You must inform them if in the last two years you have:

  • given away any assets
  • sold any valuable assets at a price that was less than their original worth e-g sold a car with a market value of £2000 to a friend for £200
  • prioritised repaying one debtor over others eg if you paid off a debt you owed to a family member but did not repay your other creditors

If any of these conditions apply to you, your DRO application may get rejected. The inability to disclose this information to your DRO advisor can jeopardise any future arrangements. Your DRO advisor will carefully consider your circumstances and every detail you disclose to them before making a decision.

Debt Relief Orders and Restrictions

Certain rules called ‘restrictions’ will apply to you 12 months from the date your DRO goes into effect. You will have to follow these rules. The main restrictions are given below:

  • You must not borrow £500 without informing the creditor that you have a DRO
  • You might not be able to hold certain public offices
  • You will not be able to apply for a DRO again in six years
  • If you are running a business in a different name, you will be required to disclose the name you used for your DRO to everyone you do business with
  • You cannot promote, manage or set up a limited company or hold the office of a company director without taking special permission from the court
  • Throughout the term of your DRO and for three months after it elapses, the details of your debt relief order will appear on the Insolvency Service’s Individual Insolvency Register which is open to the public.
  • If you open a bank account, you may also need to inform your bank or building society about your DRO

As is evident, a debt relief order can impact your life for a long time to come. That is why it is very important to determine whether it is the right option for you and you can comply with all the restrictions before you apply for one.

How do Assets Affect a DRO?

You need to have minimal assets (worth less than £2000) to apply for a debt relief order in the UK. An ‘asset’ is any possession of value that can be sold to raise money and repay a portion of your debts.

Examples of assets include:

  • Your property
  • Your car
  • Your savings
  • Your shares
  • Jewellery
  • Antique items and artefacts
  • Computers
  • Any money other individuals owe you

Assets lose their value over time because of a process called depreciation. That is why your DRO advisor will compute the worth of your assets based on how much they would be re-sold for in their present state, not the amount you originally bought them for.

Which Assets Are Not Included in a Debt Relief Order?
While figuring out the total value of your assets, certain items and belongings will not be included in the final count. These items include:

  • Essential household items you need such as bedding, clothing, appliances and furniture
  • Your tools of trade or any other items that are needed for your job

Can I Keep My Car on a Debt Relief Order in the UK?
To apply for a debt relief order, your total assets should not be worth more than £2000 but you can own a vehicle valued up to £2000 on top of this limit.

You will be expected to offer details about your vehicle like the model, make and registration number. The authorities will use this information to check the value of your car. If it appears to be worth more than the maximum limit, you will have to provide valuations from two motor dealers to prove your case.

If you have a vehicle that you use for business purposes only, it will be included in the final asset count. So, if your business vehicle is valued at over £2000, you won’t be eligible to apply for a debt relief order.

The £2000 limit applies to all vehicles except for the ones that have been specially adapted to help people with physical disabilities.

How Is My Home Affected By a DRO?
Homeowners are not eligible to apply for a debt relief order, regardless of whether their home is in negative equity. If you own your house, any DRO application you submit will be rejected.

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What If I Do Not Qualify for a Debt Relief Order?

Debt relief order is only one of the many debt solutions available to struggling debts based in the UK. If you do not meet the eligibility criteria for a debt relief order, do not worry. There are alternatives to debt relief orders.

Applying for another debt solution that suits your situation better can help with your debt problems. Alternatives to DRO include:

At MA, we have a team of impartial and polite representatives who routinely offer guidance to people struggling with debt on a case-by-case basis. They will hear you out, take stock of your financial circumstances and set you on course to a debt solution. Get debt help!


How Much Does a Debt Relief Order Cost?

It costs £90 to apply for a debt relief order. The payment should be made to the Insolvency Service, a UK government organisation that was established to act as an intermediary between borrowers struggling borrowers and creditors.

Unlike bankruptcy fees, you cannot get any reductions or exemptions based on your income level or benefits. You need to pay the amount in full before submitting your application.

But you do not have to pay it all at once. You can pay the DRO fees in the form of affordable instalments over six months. Your application will be considered once you have paid your full dues. If you cannot pay the fee, you may be able to get assistance from a debt help charity.

Note: The DRO fee is non-refundable. Once you have made the payment and submitted your DRO, you will not be able to claim this money back, even if the debt relief order is rejected or cancelled.

The Official Receiver

Debt relief orders fall under the category of formal insolvency solutions. You receive a debt relief order from an official receiver. An official receiver is an official who works for the bankruptcy court and is assigned to your case. However, you need to apply for a DRO through a qualified debt advisor.

The official receiver has the power to revoke or reject your DRO application. That is why it is very important to apprise them of your situation honestly and cooperate with them throughout the full term of your debt relief order:

  • If the official receiver requests your financial information, you must provide it to them
  • If your DRO is in effect and there have been any changes in your circumstances, you’re required to update your official receiver about them
  • You must provide the official receiver with a complete list of your debts
  • You are also required to give them a full list of your assets
  • If your income increases, you inherit property or have a windfall e-g winning a lottery, you must inform your official receiver.
  • If you are moving out, you need to inform your official receiver about any change of address

Failure to comply with these conditions can result in the official receiver cancelling your debt relief order or even taking legal action against you. Remember, it is within their scope of power to file a criminal or a civil lawsuit against you if you refuse to follow any of these terms.

How to Apply for A Debt Relief Order

Here’s how you apply for a debt relief order:
Step 1: Talk with our expert debt team and confirm whether you are eligible for a DRO. You can get in touch with our expert debt team by calling us on 0800-056-6820.
Step 2: If a debt relief order fulfils your requirements, complete the application form with a specialist DRO Debt Advisor.
Step 3: Pay the one-time fee of £90 for the application to be processed by the Insolvency Service.
Step 4: Wait for correspondence from an Official Receiver. They will inform you whether the application is approved.

Before You Apply

Going for a debt relief order is a decision that should not be taken lightly. Think about the following points before you apply:

  • Get debt help – Reach out to a debt expert and check with them if you qualify for a DRO
  • Budget – Create a personal budget to see how much money you are earning and spending. This will help you determine whether you can afford a debt relief order
  • Organise – Gather all your receipts and create a record of all your debts and how much you owe to each creditor
  • Counter-check – Check the information you have gathered against your credit reference file to ensure that you have not forgotten any debts
  • Save – Begin saving up for the £90 application fee

Get Debt Help from Experts

Money Advisor is committed to providing the best possible debt management service to all those who need help with their finances.

If you are struggling to make ends meet or perhaps have experienced a change in circumstances that have affected your ability to manage your finances, please contact us as soon as possible for debt help. We will complete a thorough, impartial examination of your situation and put you on the road to financial recovery.



Need more info? Here are a few of our most frequently asked questions on this topic. If you don’t see the answer you’re looking for here, give us a ring – we’d love to help.

What does DRO stand for?

DRO is short for debt relief order

Will a debt relief order impact my credit score?

A debt relief order will negatively affect your credit score but not as much as multiple ongoing arrears or legal action. Your credit score will begin to improve once you have controlled your debt problem.

How long does a debt relief order stay on credit file?

Like most formal debt solutions, a debt relief order will stay on your credit file for up to six years after the date your DRO came into effect.

Will my credit rating be affected?


Are DROs recorded publicly?

Yes, details of your DRO will be added to the Individual Insolvency Register which is a public register – it will be removed 3 months after your DRO ends.

Can I get a mortgage with a debt relief order?

No, you will not be able to obtain a mortgage while you have a debt relief order in place – and even if you do, owning a home would make you ineligible for a DRO

Can I borrow if I have a debt relief order?

With a disposable income of £50, it will be hard to obtain credit if you have a debt relief order – even if you do, for debts over £500 you are legally required to disclose to your lender that you are in a DRO. Failure to do so may result in prosecution or your creditor filing for a bankruptcy order against you.

How long does a debt relief order last for?

A debt relief order lasts for a total duration of 12 months in most cases.

How long does a debt relief order take to process?

The official debt relief order process can take up to 10 working days or more.

What is the difference between a debt relief order and an IVA?

A debt relief order is for people with low income and minimal assets while an IVA is suitable for people who can afford repayments and wish to protect their assets. Read more about IVA

Can a DRO be refused?

A debt relief order application can be rejected but refusals are rare, especially if you are eligible and you comply with all the terms.

What happens once the debt relief order is finished?

There will be an assessment of your financial condition and all of the debts listed on your debt relief order will be written off.

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