What is a DRO? (UK)

What is a Debt Relief Order?

A DRO is a type of insolvency aimed at people who owe less than a set amount and have minimal assets. It is only available in England, Wales and Northern Ireland. If you qualify, your debts are frozen for 12 months. At the end of the period, provided your circumstances have not improved, the debts included in the DRO are written off.

You must apply through an authorised debt adviser, often called an approved intermediary. You cannot apply for a DRO on your own.

Eligibility criteria

To apply for a DRO you normally need to meet several criteria:

• Your total qualifying debts must be below a set limit (currently £30,000 in England and Wales; this may change over time).
• You have £75 or less of spare income each month after essential living costs.
• Your assets are worth less than a set amount (usually £2,000), and any vehicle you own is worth less than £2,000.
• You haven’t owned a home or applied for a DRO within the last six years.
• You live in England, Wales or Northern Ireland.

Some debts cannot be included in a DRO (for example, student loans, criminal fines and certain child maintenance arrears), so it is important to check whether your debts qualify.

How it works

After discussing your situation with an approved intermediary, they will help you complete the application and submit it to the Insolvency Service. If accepted, the DRO will freeze your debts and interest for 12 months. During this time you must stick to certain restrictions, such as not obtaining credit over £500 without telling the lender and not acting as a company director.

If your finances improve significantly during the 12 months, your DRO can be revoked and creditors may resume action. Otherwise, after the 12‑month moratorium, your included debts are discharged and you are released from them.

Considerations and alternatives

A DRO is usually cheaper than bankruptcy and may allow you to keep assets like a basic car. However, it still impacts your credit record for six years, and the public register will show your name and details. You must also pay an application fee to the Insolvency Service.

If you do not meet the strict criteria for a DRO, other options such as a Debt Management Plan (DMP), an IVA or bankruptcy might be available. Each has different costs, durations and legal effects.

Sources

• GOV.UK – Debt Relief Orders
• StepChange – Debt Relief Orders
• MoneyHelper – Debt Relief Orders explained