Debt Relief Order

What is a debt relief order

A Debt Relief Order (DRO) is a way of dealing with your debts if you can’t afford to pay them. It means you don’t have to pay certain kinds of debt for a specified period (usually 12 months).

At the end of the DRO period, the debts included in it will be written off (‘discharged’) and you won’t have to pay them.

If you obtained any of your debts through fraud, you will have to restart paying them when the DRO has ended.

If your circumstances change so that you are able to pay some or all of your debts, your DRO may be revoked so you can arrange to pay your creditors (the people or companies you owe money to).

Who is eligible for a debt relief order?

DROs don’t suit everyone. You are only eligible for a DRO if you meet all the following conditions:
You are unable to pay your debts.
You owe up to a maximum of £20,000 only 
Your assets aren’t worth more than £1000 in total
You have less than £50 to spend each month, after paying tax, national insurance and normal household expenses
You’ve not had a DRO in the last 6 years

You must not be involved in any other formal insolvency procedure at the time you apply for a DRO, such as:

An undischarged bankruptcy order;
A current individual voluntary arrangement;
A current bankruptcy restrictions order (BRO) or undertaking (BRU);
A current debt relief restrictions order or undertaking (DRRO or DRRU);
An interim order.

If you are currently petitioning for bankruptcy (asking a court to make you bankrupt) and the court
has not referred you to the DRO procedure, then you won’t be allowed to apply for a DRO at the
same time.

If a creditor is currently petitioning for your bankruptcy (asking a court to make you bankrupt), then
you must get the creditor’s permission before applying for a DRO.
If you have given away any assets or sold them for less than their true value in the last 2 years, the
official receiver may not approve your application.
If you have preferred any creditors over others in your payments within the last 2 years, the official
receiver may not approve your application.

Applying for a debt relief order

You can’t apply for a DRO yourself; you have to ask an authorised debt adviser to do it for you. Try Our Calculator

Your debt adviser will help you complete the application and assess whether a debt relief order is the most suitable option for you, you can also try our online calculator below ⬇

 

Do You Qualify?

Roughly how much unsecured debts do you currently have?

Less Than £6,000
£6,000 - £10,000
£10,000 - £20,000
More Than £20,000

What is your current employment status?

Full-time employment
Part-time employment
Looking for work
Unemployment
Benefits

What country do you live in?

England
Scotland
Wales
Northern Ireland

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Debt Relief Order Cost

The official receiver’s fee is £90.This must be paid at the time of the application and won’t be refunded once a decision has been made, even if you aren’t granted a DRO.

The fee must be paid in cash. Some people are able to get a charity to pay their fee – your debt adviser can tell you more about this.

What Are The Restrictions Of A Debt Relief Order?

A DRO places certain restrictions on you, as follows:

If you wish to obtain credit of £500 or more, either alone or jointly with another person, you must first tell the lender that you are subject to a DRO. This restriction applies to borrowing money, and also to getting credit by acting with the intention of getting it, even though you have not entered into a specific agreement for it. This would include, for example, ordering goods without requesting credit but then failing to pay for the goods when they are delivered.

If you carry on a business (directly or indirectly) in a name that is different from the name under which you were granted a DRO, you must first tell all those with whom you do business the name under which you were granted a DRO.

You may not be involved (directly or indirectly) with the promotion, management or formation of a limited company, and may not act as a company director, without the court’s permission

You will not be eligible to apply for a DRO again for 6 years.

Apply for an overdraft without telling your bank or building society about your DRO

You are permitted to open a new bank or building society account after the granting of a DRO. However, the bank or building society may require you to disclose that you are the subject of a DRO. It may then decide whether or not to permit you to open an account, and whether to impose any conditions or restrictions on the use of the account. You must also tell the bank or building society that you are subject to a DRO before you apply for any overdraft facilities. Also, if you are subject to a DRO you must not write cheques that are likely to be dishonoured.

If, when enquiring into your affairs, the official receiver decides that you have been dishonest before or during your DRO or that you are otherwise to blame for your position, they may apply to the court for a DRRO. The court may make an order against you for between 2 and 15 years, and this order will mean you continue to be subject to the restrictions of a DRO.

Debts You Cannot Include In A DRO

Some types of debt won’t be covered by a DRO and you will still have to pay them.

These are:

Child maintenance, or anything you owe under family proceedings

❌ Student loans

❌ Budgeting and crisis loans from the Social Fund

❌ Debts secured against an asset you own

❌ Fines for drug offences

❌ Damages or fines a court has ordered you to pay

❌ Unpaid TV licence fees

❌ Any debts you incur after the DRO is granted

If you run up new debts after the DRO is granted, you could face:

A bankruptcy order

Prosecution, if you incurred a debt without telling the creditor about your DRO

You must also continue to pay any regular commitments like rent and bills

Do You Qualify?

Roughly how much unsecured debts do you currently have?

Less Than £6,000
£6,000 - £10,000
£10,000 - £20,000
More Than £20,000

What is your current employment status?

Full-time employment
Part-time employment
Looking for work
Unemployment
Benefits

What country do you live in?

England
Scotland
Wales
Northern Ireland

1. Great news! It looks like we can help

Get your results now, and find out how to:

  • Stop Creditor 4300 people we have helped in last 7 days
  • Pay as little as £85 per month
  • Get your estimated debt write off percentage

We've helped 139 people solve their debt problems today

2.Take the next steps today.

Get your 100% free debt advice results straight to your mobile today

There is no cost or commitment at this stage

When The Debt Relief Order Has Finished

At the end of your DRO, the scheduled qualifying debts listed in it will be discharged and you won’t have to pay them. If you obtained any of your debts through fraud, you will have to restart paying them when the DRO has ended.

You can check the date your DRO ended online using the Individual Insolvency Register, when your DRO (moratorium period) has finished, keep your order paperwork.

You might need to show evidence of your DRO order, especially if you are trying to get credit or update your credit record. Anyone can ask you for evidence of your DRO.

How Will My Credit File Be Affected?

Your DRO will usually stay on your credit reference file for 6 years from the date it was granted.

You may need to send the credit reference agencies a copy of an official document stating that your DRO has ended, if they don’t update your file automatically after 6 years.

Wording What Do They Mean?

We understand it can be difficult to understand certain terminology/wording, below is a break down of what certain wording means.

Approved intermediaries
Members of the debt advice sector who have been approved by a competent authority to act as DRO advisers. They will advise you, help you complete the online application for a DRO, and submit the application on your behalf. Only an approved intermediary can submit an application online.

Asset
Something you possess that has some monetary value or can produce a cash flow and so benefits you. An asset can therefore be used to repay debts.

Bankrupt
A debtor who has been made bankrupt by a court due to insolvency.

Bankruptcy
Your insolvent status after being declared bankrupt. Bankruptcy restrictions order (BRO) or undertaking (BRU). A formal insolvency proceeding where a court order is made against you, or where you have given an undertaking. Certain restrictions will be imposed on you, which will continue for a specified period of between 2 and 15 years.

Competent authorities
Debt and financial advice organisations that have been appointed to a position of competent authority by the Secretary of State and can therefore authorise a member of the debt advice sector to act as an approved intermediary.

County court administration order
A formal insolvency proceeding where the court orders you to make regular payments to the court. The court will take a 10% administration fee and then distribute the net funds to creditors on a pro rata (proportionate) basis. A period of moratorium exists while the order is in effect, preventing creditors taking action to recover their debt. See Part 6 of the County Courts Act 1984.

Creditor
An individual or body to whom you owe a debt or obligation that can or could be expressed as a monetary sum.

Creditor’s bankruptcy petition
A formal bankruptcy proceeding where a creditor applies to court for a bankruptcy order against a debtor.

Debt management plan (DMP)
The debtor, with the help of a debt adviser, sets out a schedule for repaying their debts to their creditors, which involves regular payments to an agent.

Debt relief restrictions order (DRRO) or undertaking (DRRU)
A civil sanction that a court may impose on a debtor. It is a formal insolvency proceeding where the restrictions of a DRO continue to apply for a specified period of between 2 and 15 years. If while applying for the DRO, or after having it approved, you are found to have not given an open and honest account of your financial affairs, or you have not cooperated with the official receiver, you may have a DRRO enforced against you.

Debtor
A person who owes money (a debt) to a creditor and who may therefore face legal action in respect of that money, if they fail to meet the terms agreed with the creditor to repay the debt.

Debtor’s bankruptcy petition
A formal insolvency proceeding that occurs when a debtor has applied to a court for their own bankruptcy.

Discharge
The process of freeing a debtor from their obligations, whether from the debts they owe or from the restrictions imposed upon them.

Individual insolvency register (IIR)
The online database that records all individuals who are currently subject to formal insolvency proceedings.

Gross assets
The value of your combined assets before all charges and other fees requiring repayment have been deducted. Excluded from this are domestic motor vehicles up to a value of £1,000, approved pensions, clothing, bedding, furniture, household equipment and other basic items you and your family need in the home.

Individual voluntary arrangement (IVA)
A formal arrangement between a debtor and their creditor(s), where a debtor will pay all or an agreed part of their debts. An insolvency practitioner supervises an IVA. Creditors included in the IVA must not take individual action to enforce their debt.

The Insolvency Service
An executive branch of the department for Business Innovation and Skills (formerly BERR), which employs official receivers to administer personal insolvency, compulsory company liquidations, redundancy payments and DROs.

Interim order
A formal insolvency proceeding that a debtor can apply to court for, if for example they are seeking an IVA. An interim order has the effect of a period of moratorium.

Moratorium period
A length of time when your debts are protected from the claims and actions of your creditors. Creditors can only continue or start legal action against you for repayment of these debts if they get the permission of the court. After the moratorium period has ended, these debts are usually discharged, unless the DRO is revoked.

Official receiver
An officer of the court and civil servant, employed by The Insolvency Service, who deals with bankruptcies, compulsory company liquidations and DROs.

Revocation of DRO
How the official receiver or the court may terminate a DRO.

Secretary of State
A cabinet minister at the head of a government department, who has vested statutory powers to carry out the business of their department.

Secured creditors
Creditors who have a specific claim over one or more of your assets, such as a mortgage or charge over a house, and thus possess a secured debt.

Secured debts
A debt backed or secured by a collateral (an asset) to reduce the risk associated with the lending. An example would be a mortgage, where a house is considered collateral towards the debt. If you default or fail to meet one of the terms of repayment, the bank may seize your house to sell, using the proceeds to settle the debt.

Undischarged bankrupt
A debtor who is currently subject to a bankruptcy order and its restrictions and thus has not been discharged.

Unsecured creditors
Creditors who do not have a specific claim over the debtor’s assets for all or part of the sum owed to them and thus have unsecured debts. Some unsecured creditors may also be judgment creditors (creditors with a court order relating to the debt).

Unsecured debts
A debt where the creditor/lender would not be entitled to specific assets if the debtor defaulted. An unsecured debt therefore poses a far higher risk to lenders, and lenders of unsecured money usually require a much higher return. Unsecured debts normally form the bulk of the money owed by an individual and may include bank loans, credit cards, unpaid utility bills or income tax and any amount still owing to secured creditors after the value of their security has been repaid to them. Only the unsecured element of any debt would qualify for a DRO, though not all unsecured debts will qualify.