Can I get a Debt Relief Order?

A Debt Relief Order (DRO) is one way to deal with your debts. It is meant to be used by people who meet these criteria:

• Do not own their own home
• Don’t have much spare income (less than £50 a week)
• Have debts of £20,000 or less

Certain types of debt do not contribute to this limit, so do check whether you’re eligible for a DRO before you decide to proceed.

To apply for a DRO:

• You must pay a fee of £90 – if you cannot pay, some charities might be able to help you pay
• You must meet with a DRO adviser (also known as an approved intermediary) as you cannot submit your own application. You should be able to find a DRO adviser at your local Citizen’s Advice Bureau branch

If a DRO is in action:

• You won’t have to make payments towards the debts included in your DRO
• Your creditors cannot force you to pay the debt

The DRO period usually takes a year to complete. After this:

• Your debts will be written off
• You’ll still be responsible for paying off debts that weren’t included in the DRO

A DRO is an effective way of getting out of debt, however it will have an impact on your lifestyle and credit rating. Here are just a few ways a Debt Relief Order might change things for you:

• If your debts relate to goods you have bought on a ‘hire purchase’ basis, you may have to give them back
• The DRO will stay on your credit record for six years; this may make it harder for you to get credit or find a new home in the future

You will also have to follow certain restrictions during the DRO year. This means:

• You must tell potential creditors about the DRO if you want to borrow £500 or more
• You cannot be involved in promoting, managing or setting up a limited company. You also cannot be a company director without getting permission from the court
• You must tell everyone you do business with the company name used when you got the DRO, even if your business is now under a different name

Your details will be on the Insolvency Service’s Individual Insolvency Register while the DRO is in force and for three months after. However, if this could lead to violence against you or a member of your family, you can ask that your name doesn’t appear on the register.

Make sure you understand the impact a DRO may have on your life before you apply.

Debts that can go into a DRO are called ‘qualifying debts’ and include:

• Credit cards, overdrafts and loans
• Arrears (rent, utility bills, telephone bills, council tax, income tax)
• Benefits overpayments
• Hire purchase or conditional sale agreements
• Buy-now-pay-later agreements
• Business debts

If you got these debts through fraud, you will still have to pay them when the DRO is over.

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 might have to continue paying your arrears after the DRO is made.

These debts cannot be included in a DRO:

• Magistrates court fines and confiscation orders – (fines relating to criminal activity)
• Child support and maintenance
• Student loans
• Social fund loans
• Compensation for death and injury

If you are unsure whether one of your debts would be covered by a DRO, check with your DRO adviser. 

You may be able to get a DRO if your situation fits all of the following criteria:

• You cannot pay your debts
• Your debts are not above £20,000
• You have £50 or less of disposable income (after you’ve paid household expenses)
• You are not a homeowner
• Your assets (savings/things of value) are worth less than £1,000 – though some items will be ignored when working out the value
• Your car, if you own one, is not worth £1,000 or more (unless it’s one that’s been adjusted because you have a disability)
• If you have already used a Debt Relief Order, it must be at least six years after your last DRO and you must not be going through any other insolvency proceedings (e.g. bankruptcy or IVA)
• You have lived, had a property or worked in England or Wales in the last three years

If you do not fit these criteria, you might have to look at alternative ways to pay off your debt.

If you think you’re eligible and a DRO is the right step for you, follow this process to apply:

• Find a local DRO adviser; they’ll confirm you’re eligible and help you make the application
• Pay the fee
• Wait for the Official Receiver to tell you whether the application’s successful

Look back at your finances; if you have done any of these things in the two years before our application, you must declare it:

• Given away belongings
• Sold belongings for less than their value (e.g. selling a car worth £2,000 for £200)
• Prioritised one creditor over another (e.g. paid a relative instead of another creditor)

Your application may be refused if any of these apply to you, though that is dependent on the Official Receiver’s findings. They will look at all the facts of your case before making their decision.