Debt Relief Orders (DROs) – everything you wanted to know but were afraid to ask

posted by in Debt

20130131_144002Statistics released today revealed that the number of people applying for DROs is higher than bankruptcy. Even though they’re increasing in popularity they’re still not as well-known as their insolvency brothers, IVA and bankruptcy.

What is a DRO?

DROs are often referred to as a form of “mini bankruptcy”, which isn’t too far from the truth. Like bankruptcy, it’s a way to get debts written off through the court system when you can’t afford to pay them back.

DROs are only available in England, Wales and Northern Ireland. Go to our debt advice in Scotland page to find out about debt solutions available if you live there.

If you meet the criteria then you’ll be placed into a 12 month ‘moratorium period’ (a fancy way of saying ‘waiting time’). During this year your debts will still exist but the courts will notify your creditors of the DRO, so you’ll not have to make payments to your creditors and they won’t be pestering you with letters and phone calls.

If your situation hasn’t improved by the end of the 12-month period you’ll be discharged from the DRO (a fancy way of saying that it’s ended) and your debts are written off.

What are the criteria?

To apply for a DRO you need to meet the following criteria:

  • You have to have under £50 per month available after paying essential living costs
  • You must have under £300 in personal assets (not including your car)
  • If you have a car if must be worth £1000 or less
  • Your debts must be under £15,000

How do I know if I’ve under a £50 a month spare?

We can help you work this out! If you contact us for advice we’ll plan a monthly income and expenditure budget which will show what you’ve got coming in and what you need to live off (not including debt payments or luxuries). By taking your outgoings away from your incomings we’ll know what’s left.

What’s classed as an asset in a DRO?

Basically as asset is something that you own that could be sold to raise money. It doesn’t include day-to-day things like clothes or furniture. It’s more things that are worth a bit, so if you’ve got a brand new 60-inch LED TV then you might not qualify for a DRO.

What debts are included?

Credit cards, overdrafts, loans and any other kind of unsecured credit debts are included in a DRO – the kind of stuff folk most expect. However it’s often a surprise to people that arrears on household bills, benefit overpayments and items bought on finance are also included.

What about the fees?

The fee for a DRO is £90 and is paid just before your application is submitted to the Insolvency Service. If you apply for your DRO through us we’ll send you a letter with a barcode on, which can be used to load up payments at local shops with PayZone facilities.

You can pay the £90 in instalments but will only be able to apply for your DRO once your payments add up to the total amount.

Who can help me apply?

We can! We’re an ‘approved intermediary’ for DROs. We can put together an application with you and submit it to the Insolvency Service on your behalf.

Before doing any of this we’ll want to make sure a DRO is right for you, so we’ll look at your finances and advise you on all the options. So if you’re interested in a DRO get in touch with us. You can do this online using our advice tool Debt Remedy or by giving us a call.

What happens if my situation changes?

If your finances change during a DRO notify the Insolvency Service and your situation will be reassessed. If you still meet the criteria your DRO will carry on; if you’ve had an improvement in your finances that means you don’t meet the criteria then your DRO will end and you’ll be back to paying your debts (but bear in mind that you should be better placed to deal with the debts).

 Will it affect my credit rating?

It’s a big “yes” for this one. As with bankruptcy a DRO will make your credit rating pretty rubbish for six years. So even after your DRO has been discharged it’ll still be hard to get credit. However most people who’ve got to the point of doing a DRO aren’t interested in ever getting credit again anyway!

At StepChange Debt Charity we want you to be free of debt and save money.

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  • moneyaware


    It would depend on the situation. I wouldn’t expect them to dig too far back due to how busy they are. But on the otherhand, if they suspected something was fishy they’d be more likely to dig deeper.



  • Charw321

    Applied for a DRO 2 years ago so have been free of the moratorium period for 12 months, no creditors are contacting me but one of them is still listed on my credit report as having a large balance outstanding i.e. they haven’t updated the balance to “satisfied” and are unwilling to do so unless I provide them with a certificate of completion or a discharge certificate which you obviously don’t get with a DRO.

    Are there any legal guidance notes that I can send to them which will back me up when I tell them that they must update my credit report?


    • moneyaware


      James Jones from Experian dealt with a very similar answer on his Q&A page which I think applies to your situation too.

      The reply from James Jones says that If they won’t update your record then you should make a complaint to the company. If they still don’t update your file then you could ask the Financial Ombudsman Service to investigate.

      I hope this helps.


  • moneyaware

    Hi there Adam,

    One of the criteria for a DRO is that you have to have assets of under £300. If you get a compensation payout during the course a DRO’s “moratorium” period – the 12 months following your application being accepted – then it’s likely you’ll no longer meet the criteria of the DRO so it would be cancelled.

    So a compensation payment could impact on a DRO. I’m not sure how a DRO would impact on a compensation payment though – that would be something to take up with the people handling your claim maybe.

    Kind regards


  • Babe

    Hello. I am currently in the “waiting” period of my DRO. Since I applied my partner has moved in with me and now have another child. I still receive benefits but obviously slighter more, however, I am spending more too. What does this mean for my application? what happens at the end of my DRO. Is there another interview where they ask my income and expenses? Will they say that I get more money now so will have to pay back? It’s all so confusing? Please help

    • moneyaware

      Hello there,

      Thanks for getting in touch.

      If your circumstances change during the waiting period of your DRO you will need to let the OR (Official Receiver) know. They’ll want to know about your current income and outgoings and there’s a possibility that your DRO could be revoked if they think you now have more than £50 a month available for debts. You mention that your living costs have gone up alongside your income, so it may work out that your overall position hasn’t changed and you can continue on your DRO.

      Keep a copy of the letter safe and send it on a recorded service so you have proof that it’s been received.

      If you’d like more information about this we have a DRO guide that you might find useful. You can find it here (page 9 covers changes in circumstances).

      I hope this helps,


  • Clare Garcia

    Hi My DRO was discharged in January 2013, however some of the debtors are refusing to show the account as settled/satisfied?? And some of the debtors have knowingly sold the discharged debts and I now have other companies harassing me and showing the debt on my credit report as a current default on my credit file??
    Please help, the insolvency service have said the companies that have bought the debt have no legal recourse to recover the debt but how do I get it off my file??
    For example;
    Vodafone 1800, showing as settled/satisfied…..sold to Lowell who now appear on my credit file showing a current default of 1800?? aaaargh

    • moneyaware

      Hi Clare,

      I’d suggest making a complaint directly to the companies involved. They’ll investigate and have to give you a response, which I’d hope would involve updating your credit report to accurately reflect what’s gone on.

      There’s some really useful guidance available on the Information Commissioner’s Office’s website: If you need any further help I’d suggest calling their helpline.

      Kind regards


  • marie major

    Hi I am living with my daughter in her house as I had to sell my house due to long term illness. The only income I have is my benefit. But will they take my daughters money into account? I have been trying to pay off my debts since my illness 4 years ago.

    • moneyaware

      Hi Marie,

      Thanks for your message. It would depend on the type of benefit you’re receiving, but I’d expect that your daughter’s income wouldn’t affect what you’re entitled to. For example, if you receive employment support allowance, this is only calculated based on your own personal circumstances.

      Your local council will have benefits advisor who will be able to provide more information about the benefits you’re entitled to and the sort of things that would affect it.

      Kind regards,


  • Thomas

    Hi All,

    I am about to apply for a DRO. My car is worth just about 1000, dealer price is more than that, but private price is just under 1000. What price is considered in the application?


    • moneyaware

      Hi Thomas,

      When you apply for a DRO, your assets must be less than £300 with the addition of a car with a value of up to £1000.

      Usually, the price considered in the application will reflect the overall value of the car. So if you were to sell your car through a dealer and they
      valued it at more than £1000, this is the price we’d imagine would be taken into account. If you were to sell the car privately, at a lower price, the car will still be considered to be worth more if it can be sold for more elsewhere.

      I hope this helps,


  • moneyaware

    Hi there,

    We’d suggest speaking to whoever helped deal with your debt relief order (DRO) so that they can offer you some more advice.

    Hopefully this will help solve any problems you’ve been having.


  • AA

    can I ask if you have previously been bankrupt, (which was discharged 10 years ago) are you still eligible for a DRO?

    • moneyaware

      Hi there, thank you for getting in touch.

      Your previous bankruptcy should not prevent you from applying
      for a DRO because you’ve since been discharged. With that said, before you apply for a DRO, we would recommend that you first get in touch with us for some free and confidential debt advice. We can have a look at your whole situation and will be able to tell you what the best option might be for you.

      Our online advice tool Debt Remedy can help you put together a personal action plan in just 20 minutes:

      Alternatively, you can speak to one of our friendly advisors by visiting our contact us page:

      Kind regards


  • Elaine Leeming Lilac Lowe

    I took out a DRO 3 years ago,but I ended up dating a conman,who turned out to be a Heroin addict too :/ He took out all sorts in my name and stole from me.The Police let me down and now I am taking out a civil claim against them.Would I be eligible to take out a second DRO?My debt advisor from Citizen Advice also left out a debt of £1000 and more to Provident and when I complained he told me,I hadn’t given it to him and would have to offer to pay them a pound a month?
    I am exhausted with all this,being so let down and so gullible.
    I am already classed as vulnerable.

    • moneyaware

      Hi there Elaine,

      Thanks for getting in touch with us and I’m very sorry to hear
      of what you’ve been dealing with.

      There’s a time period of 6 years between when you applied for a
      DRO and when you’ll be able to apply for another. From what you’ve told us, I think it would be a really good idea for you to get in touch and see what options are available to you. Our Helpline number is 0800 138 1111 and we’re open Mon – Fri 8am to 8pm and Sat 8am to 4pm.

      Kind regards


      • Elaine Leeming Lilac Lowe

        Ah thank you for answering this for me :)

  • vicky

    Does DRO valid in all EU countries ? Thanks , Vicky

    • moneyaware

      Hi Vicky, thanks for posting.

      Only England, Wales and Northern Ireland residents can be considered for a DRO, and it would only apply to UK debts. If you live abroad but have UK based debts for which you need free and confidential advice, you can contact our Helpline on +44 113 297 0126. We’re open Mon – Fria 8am to 8pm UK time and Sat 8am to 4pm UK

      Kind regards


  • lilly

    i am currently applying for a DRO, just waiting for the part to pay the money with.
    I have possibly found a house exchange through my housing association, but the move will likely not happen until just after xmas.
    is moving whilst in the first year of a DRO ok?
    would I be ok to get a social fund loan to pay for moving costs or should I ask friends to help?

    • moneyaware

      Hi Lilly,

      Thanks for posting.

      It’d be hard to know for certain if you’d be able to take out a social fund loan without knowing more about the situation.

      It’s probably best to check with the company dealing with your DRO application. They
      should be able to give you a more specific answer.

      Kind regards,