Debt relief order

Key facts

How much debt must I owe?£20,000 or less.

What type of debt? ​Most types of debt except: student loans, magistrates' court fines, maintenance payments or maintenance arrears ordered by a court, Child Support Agency or Child Maintenance Service arrears, money owed under a criminal confiscation order, debts resulting from certain personal injury claims and budgeting or crisis loans.

How long will it last? You will be discharged from your debts after one year.

How it works

See our fact sheet:

Debt relief orders (DROs).

You can apply to the official receiver for a DRO on a special online application form with the help of a money adviser who has been appointed as an approved intermediary.

You will be eligible if: you are unable to pay your debts; you have £50 or less spare income each month after you have paid your normal household bills; your total debts are £20,000 or less; your total assets are worth £1,000 or less; and, if you own a car, this is worth below £1,000. You cannot apply if you have had a DRO in the last six years. If you do not live in England or Wales (or have not lived or run a business in England or Wales in the last three years), you cannot apply.

If your application is successful, most types of debt will be written off after 12 months. A DRO could be a good option if you rent your home, have few assets and little spare income.

Advantages

  • It relieves stress and anxiety.
  • There is no court hearing.
  • It allows you to make a fresh start after a year.
  • Your debts are written off if they were included in the DRO.
  • Most debts can be included in the DRO, including priority debts such as energy debt and council tax.
  • Creditors included in the DRO cannot take further action without the court's permission, once you have a DRO.
  • You have to find an application fee, but you can pay this in instalments and this is much cheaper than bankruptcy.
  • You do not have to make monthly payments on your debts while you have a DRO.

Disadvantages

  • You cannot apply if you own your home as this would be counted as an asset.
  • Not all types of debt are written off.
  • If you forget about a debt, you cannot add it in later.
  • Details of your DRO will be kept in the Individual Insolvency Register.
  • The DRO will be recorded on your credit reference file, which will affect your ability to get further credit.
  • You may have a ‘debt relief restrictions order’ made against you for dishonesty or ‘unfit conduct’.
  • In some cases the official receiver can take criminal action against you: for example, if you have supplied false information.