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 £20,000 in England and Wales and £15,000 in Northern Ireland

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.

Written by

Tags Debt
  • Cath

    Hi I was discharged from my dro in June 2014, all my debts on my credit report now say the balance is zero apart from one, can I contact them and ask them to update or do they legally not need to do that until the 6 years is up and it’s comes off my credit report?

    • moneyaware

      Hi Cath,

      Thanks for posting.

      If the debt was included in your DRO it should be written off once the DRO is complete.

      You can request that your creditor updates your credit file to reflect this, if they haven’t already done so.

      Most things will appear on your credit report for six years before they drop off. So even if the debt has been written off, the account

      may still appear on your credit file until the six year timeframe has passed.

      I hope this helps,


  • Mark

    Hello, I’m looking to enter into a DRO in the next couple of months. My question in concerning any tax refund I might receive during the DRO. I haven’t worked for several months, and as the tax year has just ended, I expect to receive some tax back. If I’ve stared a DRO and I receive a tax refund for between £150 and £300 for example….will this force my DRO to end, or do tax refunds fall under different rules as it’s a Government organisation that is giving me the money (and effectively sabotaging my DRO). I’d hate to think a DRO could fail because the Government gives you a couple of hundred pounds out of the blue.

    • moneyaware

      Hi Mark,

      Thanks for getting in touch.

      If you live in England and Wales and have assets over £1000 you wouldn’t qualify for a debt relief order (DRO). If you live in Northern Ireland, your assets can only add up to £300.

      If you receive a refund that relates to previous tax years, this would usually be classed as an asset on a DRO.

      If the tax refund is for the current year then the payment will be split over the 12 months of the current tax year. If the

      refund is made to you before the DRO is approved, it’ll be considered an asset.

      Generally, if a DRO is already approved and you receive an asset worth more than £1000 in England and Wales or more than £300 in Northern Ireland – the DRO won’t necessarily fail. This is

      usually as long as the asset received is 50% less than the total of debt included in the DRO, and as long as the insolvency service DRO team know that the asset has been received within 14 days.

      If the asset received is less than £1000, it’s unlikely the DRO will fail. However if an asset is received between £1000 and £1849 – the insolvency service DRO team will make a decision on a case-by-case basis.

      If you’re unsure about qualifying for a debt relief order, it’d be worth getting in touch with our Helpline for some free advice. Our advisors will be able to recommend a debt solution

      suited to your situation. If a DRO is suitable for you, they’ll be able to let you know the impact a tax refund could have on your application. You can find out how to get in touch with us here:

      I hope this helps,


      • Mark

        Hi Jen,

        Thanks for clearing that up for me, I know where I stand with it now. I really appreciate your reply.


  • Becky D

    Hi, my boyfriend is going to apply for a DRO, does my income affect this? he is on a low wage and gives me money for bills. I have a good income, and how can he prove the assets are not his?


    • moneyaware

      Hi Becky,

      This is a question to ask whoever is dealing with your partners’ DRO application, as in some cases your income can impact their budget, but not in all cases.

      Whenever someone applies for a DRO, it must be done through a registered intermediary who can assess criteria, make sure a DRO is a suitable solution and also answer any questions you have such as this, before recommending this as a solution.

      I hope this helps,


  • Samantha Bennett

    Hi, me and my partner were thinking of applying for a dro as we have £36 a month left after bills, but my partner won £6000 a couple of months ago, he paid off his £1500 credit card and £300 provident loan, fixed his car and we did some home improvements, our total debt now is around £7000, we were fine for money before our tax credits were cut by £120 a month last month, now it’s a struggle. Will this £6000 win a couple of months ago effect us being accepted? Thanks.

    • moneyaware

      Hi Samantha,

      It would depend on the circumstances really. If some creditors have been paid off and not others it can be seen as giving preferential treatment, which can lead to difficulties with a DRO.

      That wouldn’t mean you couldn’t do one, it would just be something to discus with an advisor before deciding if a DRO is the best debt solution.

      I’d suggest giving us a call and going through our debt advice process. Our advice is free, impartial and we can put you forward for a DRO if we recommend it as your best option.

      Here’s our contact details:

      Kind regards


  • sharon

    I did a debt relief order in March 2011, which ended on March 2012, when will this come off my credit report ?

    • moneyaware

      Hi Sharon,

      I’d expect it to come off your credit file in March/April of 2017 as the record should be on there for six years from the start of your DRO.

      Kind regards


  • Mothertiggy

    Hi , I did a DRO a year and half / 2 years ago but on my credit report all debts are still showing as in default is this normal or do I have to do something ( like send discharge papers ? ) or will these just go after the 6 year period ?

    • moneyaware

      Hi there,

      Your credit file will still show the recent history of your accounts (plus details of your DRO in the insolvency section). Any negative information on your history should drop off after six years though. So this usually means defaults and payment history information has expired before the record of the DRO itself drops off after six years.

      Kind regards


      • Mothertiggy

        Thank you for your help

  • Danny Clark

    My income is self employed so variable,would that situation exclude me from bankruptcy ?

    • moneyaware

      Hi Danny,

      Many people have a varied income, and this shouldn’t be a single reason for a DRO being unsuitable for you. In any situation we’d look at your income and try and work out an average, and discuss your options with you.

      Kind regards


      • Danny Clark

        Thanks for getting back to me.In the end just had the suitability interview at the CAB and they feel I qualify so just a waiting game for the DRO interview.

  • Iran Manolova

    Hi.My friend did DRO last week,My question is if I give to her a car (£450 cost) as a gift can she register the car on her name?
    THank you

    • moneyaware

      Hi there,

      One of the rules around a DRO is that a person can own one domestic vehicle worth up to £1,000. So this should be okay, as long as this is the only vehicle your friend owns and the car is valued at less than £1000.

      We’d always recommend that your friend speaks to the Insolvency Service however if she’s unsure at all, as they’ll be able to confirm this.

      I hope this helps,


  • Worried

    Hi, I am being chased by high court enforcement baliffs for an old rent arrears debt, does a DRO cover that debt too? Its a high court writ of control based upon judgement obtained in county court and transferred to high court for enforcement 🙁

    • moneyaware

      Hi there,

      Thanks for getting in touch.

      I’m sorry to hear about this situation, I can understand it must be very worrying for you.

      It’ll depend on whether this debt was originally included in the DRO as to whether it’ll be covered.

      If the debt was listed in your original DRO application then I’d recommend speaking to the DRO team in the Insolvency Service and they should be able to help to deal with this debt.

      If the debt wasn’t listed in your DRO application then it’s very likely you’ll be liable for the debt. In this situation I’d recommend you give us a call for advice. We can work out what options you’ve got available to sort this out. Here’s our contact details:

      I hope this helps but if you have any more questions please let us know.

      Kind regards,


  • Maggie

    Hi, if my car is worth more than £1000 will I be forced to sell it if I apply for a DRO? I obviously need my car to get to work as using public transport is not viable… before I apply, would I be able to sign ownership of the car over to my Mum?

    • moneyaware

      Hi Maggie,

      One of the criteria for a DRO is that you don’t own a vehicle worth more than £1000, so if you do this would be something you’d be asked about before applying, rather than after. Unlike bankruptcy, you aren’t forced to sell any assets, as the qualifying criteria is checked before you apply and to check your eligibility.

      This shouldn’t put you off speaking to someone who can help however, as there may be other options available to you. While it’s not possible to apply for a DRO yourself, an approved intermediary such as ourselves can help with this and talk about your car and any assets.

      If you’d like to speak to us, please get in touch by visiting our website at

      Kind regards


  • j b

    Hi, my sister had a D.R.O last December 2015 and I now want to give her my old car it is probably worth less than £1000. She still has her car from last December of which the insolvency service are aware of, my question is – does she need to let the insolvency service know if she changes her car? If so how long does this period of having to inform of every change in car last? Will the value of the car effect her D.R.O? Cheers.

    • moneyaware

      Hi there, thanks for posting.

      As your sister is still technically within her DRO, she would need to make her Official Receiver (the person who oversaw her DRO) know about the car and its value.

      Cars are classed as assets and should the car be worth more than the allowed asset value, this could affect her DRO. Should the Official Receiver agree to her taking ownership of the car, they may still ask an independent body to appraise the car and declare its value.

      Kind regards