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

posted by in Living with 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 £1000 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
  • You must reside in England, Wales or Northern Ireland, or have carried out business in these countries in the last three years

WATCH: DRO advice from StepChange Debt Charity

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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Tags Living with debt
  • AmyLou

    have applied for a DRO but I owe money to a family member. I have included this on there. What happens with this? Is it written off? Or do I have to pay it? Or do the insolvency pay it thanks

  • Louise

    I’ve got a DRO and it was discharged in 2014, does that mean in 2020 my default debts that are currently on there will disappear along with the DRO? My score is really low due to these monthly defaults although it’s written in my DRO. thanks

    • moneyaware

      Hi Louise,

      Thanks for posting.

      Most things appear on your credit file for six years before dropping off. This means it’s possible that some debts may drop off your credit file before the DRO does.

      I hope this helps,


  • Mario

    I’m considering entering a DRO as am currently majorly struggling with my finances. My outgoings are greater than my monthly wage. I have been advised that a DRO is possible but can take 6-8 weeks to process. My issue is I am borrowing money every month to get me through, if I take out another credit card to see me through to the DRO is processed (6-8weeks) will this have an adverse effect on my application?

    • moneyaware

      Hi Mario,

      In this situation, it’s really important to speak to someone who can offer more advice, as every situation is different.

      You might already be aware that to be offered a DRO you need to contact a registered intermediary (such as StepChange Debt Charity) to get advice and support. We can also answer any questions you have about this.

      If you haven’t yet had advice, please feel free to get in touch with us at and we’ll be able to help.

      Kind regards


  • Gemma Mckeown

    hi i had a dro 4 years ago and many of my debts are still appearing on my credit file as defaulted but i though they had to appear as settled or not show on it at all can someone help me as really trying to improve my credit but cant while they are all there as defaults, thanks

  • Lisa B

    Hi there,

    I would be very grateful for some advice please.

    I am an Irish girl who has been living in the UK for 11 years but now owe debts of just under £20,000. I have bi polar disorder and had a relapse recently and was admitted to hospital. I have been struggling to pay off my debts since i went back to work, but on a part time basis after my son was born and had agreements with some of my creditors for reduced payments but kept paying a couple of others in full including my phone bill. I am not sure why but this is what I chose to do when I was in a panic. I was also suffering from post natal depression at the time.

    My partner and I have been having relationship difficulties and due to my ill health I have handed in my notice at work and have decided to move home to Ireland with my son to try to get well and hopefully get my life back on track.

    I spoke to Citizens Advice a few weeks ago who told me that, in order to apply for a DRO they would need a record of joint incomes into the home but we have given in notice of our flat now and my partner(ex i fear) has decided to live with his parents for the last 2 months of our lease, but he will still pay his share of the bills etc. So I don’t know how looking at (preparing)a budget is going to work, seeing as it is going to change completely in 7 weeks and I will be in Ireland then and not have any income to pay any UK debts. My parents are happy to take care of my son and I because of my ill health but will not be able to afford to pay my debts.

    My question is, I have 2 month’s pay left from work before I leave, where I will have more than £50 after bills but I need this money to make the move home with my son. Will I qualify for a DRO? I move home at the end of May.

    I would be so grateful for any help or advice you might have. I understand that this is a very complicated case and that I also do not have much time left before I move.

    Many thanks


    • moneyaware

      Hello Lisa,

      Thanks for your comment.

      We’d recommend that you get in touch with us for free debt advice, especially if you’re experiencing mental health issues and need some support.

      Because you’re about to experience a change in circumstances we may only be able to offer you what we call ‘interim’ advice (which is temporary) from our England and Wales team but hopefully we can put your mind at ease:

      However, once you move over to Ireland you can then get longer term debt advice and we may be able to offer you a debt solution:

      In the meantime, give us a call and we will help you look at your situation in detail. Gather up your current income, outgoings and debts and get in touch with us.

      I hope this is helpful,

  • Desmond Kerr

    I have got into debt through gambling…… If I use my bank statements as proof of income…… will all the gambling on statement go against me? Or will they just look at income?

    • Desmond Kerr

      I had previously tried dmp….but couldn’t afford, and have a few recent debts now.

      • moneyaware

        Hello Desmond

        Thanks for your comment. We can’t advise on individual cases, so it’s best you give us a call for debt advice that’s tailored to you.

        Get together all of your income and expenditure details, as well as details of your debts and give us a call on 0800 138 1111.
        You can read more information here about addictions and debt:

        We’re here to help, and will do everything we can to support you.


      • MallyMon

        I’d just like to add here that StepChange helped me so much. I was really desperate. BUT in your case, you also need to combine any financial help with help for your gambling problem. If you can’t, you’re just going to end up in the same situation again. DRO regulations are pretty strict and you have to manage your finances yourself, sensibly, for one year after it’s granted. Please seek help for your gambling as soon as you can. It’s all right for me to mention this ‘cos I’m not associated with StepChange. If you want StepChange to help you, they will but it’s best if you’re really committed. Why not phone them, it’s free!

  • Garton Idris

    hi i just got affered a job and i have only one week left on my debt relief , if i except this new job will my debt relief be cancelled? cause the new wage is more . however i wouldnt get paid till after the debt relief order has finished. would this cause problems with my debt relief. please help

    • Rachel

      Hi Garton, thanks for getting in touch. Congratulations on your job offer 🙂

      If you’re currently in moratorium (the 12 month period it takes for your DRO to process from date of application), and you’re aware of how much you’re due to receive from your wages, then you must let the Insolvency Service know.

      Kind regards


  • Katie Archbold

    I owe my friends and family a lot of money, as well as credit card debt, from setting up my first home. The official pages say the DRO will clear me of this. Will they be paid, or just told that I’ll never be able to pay, and to stop expecting it?

    • moneyaware

      Hi Katie

      Thanks for your comment.

      Debts to individuals are treated the same as commercial debts in insolvency. This means loans to family and friends are qualifying debts in a DRO and count towards the limit of £20,000. However, if the client’s friend or family agree that the loan was a gift and doesn’t need to be repaid, and it won’t be included.

      Before the DRO
      Before you DRO is approved payments to family or friends should be in line with those made to other qualifying debts. If you make higher payments to friends and family then your other debts, your DRO could be rejected.

      During the moratorium period
      During the ‘moratorium period’ you can’t make any payments to qualifying debts including payments to loans from family or friends. Your DRO may be revoked if the Official Receiver finds out that payments have been made.

      However you are permitted to make ‘payments in kind’ during the moratorium. For example, you could agree to repay a loan by babysitting, gardening or other services which don’t involve the transfer of cash or assets.

      I hope that this helps,


  • Rick Houghton

    Looking into getting a DRO, bit confused about the less than £50 a month to live off, it says it doesnt include money i use to pay off my debts, if i didnt have debts to pay, obviously id have more money and wouldnt need a DRO

    • MallyMon

      Contact them. They really do help. I speak as someone who had a DRO four years ago. I was desperate. StepChange helped me so much.. It doesn’t even cost you anything to phone.

    • CurlyJefferson

      The money you use to pay off you debts is factored into the budget plan.

  • Connie Palmer

    Hello my question is… I had a debt management plan that I paid off over a year ago, is it possible for me to apply for a DRO now or do I have to wait some time period?

    • moneyaware

      Hi Connie,

      There’s no reason you couldn’t apply for a DRO if you’d recently been on a DMP. However, I’d strongly recommend getting in touch with us for debt advice first.

      We can help with this, if you get in touch with us we’ll help you put together a budget, talk you through your options, and make a recommendation. If a DRO is your best option we can help you with the application. If there’s a better option we’ll help you with that too.

      Here’s some more information about how to get debt advice from us:

      Kind regards


  • Charles Baldwin

    So how does a creditor go about getting paid? It doesn’t seem fair that a legal debt can be written off to the detriment of the creditor

    • CurlyJefferson

      They don’t, similar to bankruptcy Certain debts are excluded, such as student loans and child support, but everything else (unsecured) is. And that’s it, you have zero recourse.

      Rent arrears can sometime be clawed back, or you can be subject to repossession after the year, but that’s about it.

      You can’t keep doing a DRO though, it’s once every 6 years, even if it fails.

      • Charles Baldwin

        Actually I am a US attorney and a registered FCA lender in the UK. This is the first time someone has pulled the DRO on me, so was looking for info as the Receiver has been less than helpful with their answers. Only thing I did find was that if the client lies on their application or obtained the loans by fraud then the debt becomes collectable. Funny thing was that when she applied for the loans her income amounts were totally different then the amounts given the Insolvency service and she has listed other loans and debts on her DRO when she said on her loan application that she did not have any other loans or obligations. Under UK law the Fraud Act 2006, says that witholding information that they should have included, in order to make a gain and/or cause a loss to another is fraud under section 3 of the act, or section 2 for making a false statement. Consequently I have notified the Receiver and the police. We will wait and see how that turns out

      • CurlyJefferson

        If she’s withheld, provided false information, or her situation has changed; and she hasn’t notified the Official Receiver, then than gives a high probability of the DRO being cancelled and the debts reinstated.

        During the DRO, the OR pretty much leaves people to it, so there’s a high degree of honesty involved.

        I’d say lying about your income to the IS would fit the bill. The Approved Intermediary should have double checked things like this.

        I’m sure someone with more knowledge than me can go a bit further.

        Best of luck.

      • Charles Baldwin

        I did report it to the OR but they didnt seem interested in doing an investigation so I am escalating it to their manager. Thanks for your comments

      • CurlyJefferson

        Go straight to the DRO Unit in Plymouth. That’s the main office and should deal with it ASAP.

      • CurlyJefferson

        In addition, if she has been found to have liked (for example) to the OR, it’s a criminal offense, which can involve jail time or an extended DRRO (Debt Relief Restriction Order) which gives the same DRO restrictions for up to 15 years.

    • CurlyJefferson

      I’ll add you may find during / after a DRO the debt gets sold on for pennies or some DCA tries their luck – once the person shows proof from the Offical Receiver, there’s nothing they can do.

      Your only hope would be the DRO applicant messes up in the 12 month waiting period so the debts become viable again.