Debt Relief Order (DRO)

What’s a Debt Relief Order?

A Debt Relief Order (DRO) is a form of Bankruptcy. It is a scheme where your debts are frozen for 12 months so your creditors can not demand money from you or or add interest. At the end of the 12 months, if your circumstances have not improved, then the debt gets written off. It is a form of insolvency and your name will be recorded on the insolvency register.

A DRO is designed for those with very low income who have no more than £75 left over per month after the usual expenses, and are therefore unable to make repayments towards their debts. It is a scheme for non-homeowners, and people with very few assets so their belongings can not be sold in order to repay creditors. You must have no more than £2,000 worth of these assets – car, jewellery etc. – in order to qualify for a DRO.

What Debts Can Be Included In a Debt Relief Order?​

Most debt can be included in a DRO. Some main debts that are included are:

  • Credit card debt
  • Hire Purchase arrears
  • Council Tax arrears
  • Arrears on utility bills eg. Gas / Water /
  • Electricity
  • Benefit Overpayments
  • Overdrafts
  • Payday loans

What Debts Can’t Be Included in a Debt Relief Order?

Most debts are included, however, there are certain circumstances where your debts are not covered and you will have to keep up payments towards. These include:

Any debts that have been accrued under

  • fraudulent circumstances
  • Court Fines
  • Student Loans
  • Child Maintenance

Advantages and Disadvantages of a Debt Relief Order

There are many factors to consider before applying for a DRO. Below we’ve listed some advantages and disadvantages:


  • If your circumstances remain the same, you can write off most of your debt and be debt-free after 12 months.
  • Your creditors freeze interest and charges and can not chase you for repayments for 12 months.
  • It is designed for those with few assets and no home, so you aren’t likely to be made to give your possessions up.
  • A DRO covers most debts.
  • It is a formal agreement – so once approved, your creditors have to stick with it and you are protected.


  • A DRO will hurt your credit rating and remain on your credit file for 6 years.
  • If your circumstances change within the 12 months, your DRO may be revoked and you’ll have to look at new solutions to repay your debts.
  • Your creditors may also resume charging interest and contacting you.
  • You can’t apply if you’ve had a DRO or other form of insolvency within the last 6 years.
  • Your assets will be assessed, and if the total is worth more than £2,000, you will not qualify.

What Will I Have To Pay?

When you apply for a DRO, there is a £90 one-off fee, and your case can not be processed until this is paid in full.

If your application is approved, you don’t have to make payments towards your eligible debts throughout the DRO, which lasts 12 months. At the end of the DRO, your debts may be written off, so you will not have to make any further repayments.

If your situation has improved at the end of the DRO, then this may be revoked and you will have to look into alternative ways of paying off the debts. This means the creditors may start contacting you and interest will begin to grow again.

You will also have to ensure that you keep up payments to any other debts that are not included in the DRO, such as child support, so as not to encounter further financial problems.