Debt relief order

How it works

You can apply to the official receiver for a debt relief order (DRO) on a special on-line 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 a month or less spare income after you have paid your normal household bills; your debts are £20,000 or less; your assets are worth £1,000 or less in total; and, if you own a car, this is worth below £1,000.
 
If your application is successful, most of your debts 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

Disadvantages

  • ​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 a fee of £90, 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.
  • You cannot apply if you own your home as this would be counted as an asset, or if you have had a DRO in the last six years.
  • Not all debts are written off.  For example, you cannot include: magistrates’ court fines, student loans, maintenance, CSA payments, budgeting loans and crisis loans.
  • If you forget about a debt, you cannot add it in later.
  • Details of your DRO will be kept in the Individual Insolvency Register.
  • A DRO will affect your credit rating.
  • 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.