What Is a Debt Relief Order (DRO)?
Last Updated: January 2025
Your complete guide to Debt Relief Orders in the UK. Find out if this low-cost route to writing off debt is the right option for your circumstances.
Reviewed by FCA-regulated debt advisors | Partnered with UK Insolvency Service regulated advisors
Compare All Debt SolutionsWhat is a DRO?
A Debt Relief Order (DRO) is a formal debt solution for people with relatively low levels of debt, little spare income, and few assets. It's often called a 'low-cost alternative to bankruptcy'.
When a DRO is approved, your creditors cannot take action against you to recover your debts, and you do not have to make any payments towards them. The DRO period lasts for 12 months. If your financial situation has not improved by the end of this year, all the debts included in the DRO are written off.
Low Cost
A single application fee of £90 makes it an accessible option.
12-Month Term
Your debts are frozen for one year, then written off if your situation is unchanged.
Debt Write-Off
Provides a complete fresh start by writing off all qualifying debts.
The DRO Process: A Step-by-Step Guide
- Speak to an Approved Intermediary: You cannot apply for a DRO yourself. You must go through an approved debt advisor, known as an intermediary. They will assess your eligibility.
- Complete the Application: The intermediary will help you complete the online application form with details of your income, expenses, assets, and debts.
- Pay the Fee: You must pay the £90 fee to the Insolvency Service. Your application cannot be submitted until this is paid.
- DRO is Approved: The Official Receiver reviews your application. If you meet the criteria, the DRO is approved. Your creditors are notified and cannot take further action.
- The 12-Month Moratorium: For one year, you do not make payments. You must inform the Official Receiver if your circumstances improve during this time.
- Completion: After 12 months, if your situation has not significantly improved, your debts are written off, and the DRO is complete.
Pros and Cons of a DRO
Advantages
- Very low cost (£90 fee).
- All qualifying debts are written off after 12 months.
- Creditors are legally stopped from chasing you for payment.
- A much simpler and cheaper process than bankruptcy.
Disadvantages
- Very strict eligibility criteria that few people meet.
- Negatively affects your credit rating for 6 years.
- Your details appear on the public Insolvency Register.
- If your income or assets increase during the 12 months, your DRO could be cancelled.
- You cannot be a company director during the DRO.
Am I Eligible for a DRO?
The eligibility criteria for a Debt Relief Order are very strict. You must meet all of the following conditions:
- Your total unsecured debt is less than £30,000.
- You have less than £75 per month spare income after paying essential household bills.
- The total value of your assets is less than £2,000 (and your car is worth no more than £2,000).
- You live in England, Wales, or Northern Ireland.
- You have not had a DRO in the last 6 years.
To find an approved intermediary to help you apply, you can contact a free debt advice service like StepChange or Citizens Advice.
Impact on Your Life
Credit Rating
A DRO is a form of insolvency and will be recorded on your credit file for 6 years. This will make it very difficult to get credit during that time.
Your Assets
You are not allowed to have assets worth more than £2,000. This includes savings, valuable items, and your car (unless it's worth less than £2,000).
Restrictions
During the 12-month DRO period, you face certain restrictions, such as not being able to borrow more than £500 without disclosing your DRO.
Frequently Asked Questions About DROs
What is a Debt Relief Order (DRO)?
A Debt Relief Order (DRO) is a low-cost alternative to bankruptcy for people with a low income, minimal assets, and debts under £30,000. It freezes your debt repayments and interest for 12 months. If your financial situation hasn't improved after this period, your qualifying debts are written off.
Who is eligible for a DRO?
The eligibility criteria for a DRO are very strict. You must have debts of less than £30,000, have less than £75 a month spare income after essential living costs, own assets worth no more than £2,000 in total (and a single car worth no more than £2,000), and live in England, Wales or Northern Ireland.
How much does a DRO cost?
A DRO has a single, non-refundable application fee of £90, which is paid to the Insolvency Service. This makes it one of the cheapest formal debt solutions available in the UK.
How does a DRO affect my credit rating?
A DRO will stay on your credit file for 6 years from the date it is approved. During this time, it will be very difficult to obtain credit. Your details will also be added to the public Insolvency Register for the 12-month duration of the DRO plus an additional 3 months.
Don't Qualify for a DRO?
The criteria for a DRO are very strict. If your debts are higher or you have some spare income, an IVA could be a more suitable option. Check your eligibility for free.
Check My IVA Eligibility