What is a Debt Relief Order (DRO)?

Find out more about how a Debt Relief Order (DRO) works and which debts you can use it for. Then talk to a free debt adviser about whether it’s the best way to pay off or clear your debts.

How a Debt Relief Order works

  • suitable if you are on a low income with very few assets
  • freezes debt for a year then writes it off completely if your circumstances haven’t changed

Once a Debt Relief Order is agreed, you make no further payments to the people you owe money to (your creditors).

Your creditors are only likely to agree to a Debt Relief Order if it is unlikely that you will ever be able to clear your debts.

Can I apply for a Debt Relief Order?

You can apply for a Debt Relief Order if:

  • you have qualifying debts of less than £20,000
  • you have £50 or less spare each month after paying your household bills
  • you don’t own things of value or have savings over £1,000
  • you have lived, had a property or owned a business in the last three years in England, Wales or Northern Ireland

You can’t apply for a Debt Relief Order if:

  • your creditors have applied to make you bankrupt but the hearing hasn’t yet taken place (unless your creditors agree that you can still apply)
  • you have been given a Bankruptcy Restrictions Order or Undertaking
  • you have petitioned for bankruptcy but your petition has not yet been dealt with – however, this doesn’t apply if you’ve petitioned for bankruptcy and the judge has referred you for a debt relief order instead
  • you’re currently bankrupt
  • you have an Individual Voluntary Arrangement or are applying for one
  • you have had a Debt Relief Order (see next section) in the last six years
  • you have been given a Debt Relief Restriction Order or Undertaking

Which debts can I pay off with a Debt Relief Order?

The debts you can use a Debt Relief Order for are called qualifying debts. They include money you owe on:

  • credit cards
  • overdrafts
  • loans
  • catalogues
  • in-store credit agreements
  • rent, Council Tax
  • utility and phone bills
  • benefit overpayments
  • money owed to HM Revenue & Customs, like Income Tax or National Insurance Contributions

Which debts can’t I pay off with a Debt Relief Order?

The debts you can’t use a Debt Relief Order for include:

  • child support and maintenance arrears
  • magistrates’ court fines
  • confiscation orders
  • Social Fund loans
  • student loans

For all the debts you can and can’t include in a DRO, get in touch with a free debt adviser.

How do I apply for a Debt Relief Order?

You can only apply for a Debt Relief Order through an approved person known as an intermediary.

Most free debt advice providers have approved intermediaries who can help you.

It costs £90 to arrange a Debt Relief Order and you can pay in instalments over six months.

You need to pay the fee in full before your application will be looked at.

Once you have applied and paid the fee, an Official Receiver will grant the Debt Relief Order if you are eligible.

Get free advice about a Debt Relief Order

“We were so ashamed of our debt problems that we avoided telling people. Trying to live life normally and pretend that everything was ok was very difficult.”

Hayley – who runs the Disease Called Debt website and cleared debts of £41,000.

It’s always best to talk things through with an experienced debt adviser before you decide to apply for a Debt Relief Order.

This is because the debt solution that is best for you depends on your personal circumstances.

A free debt adviser can help you make the right decisions – meaning you could be debt free sooner than you thought.

A debt adviser will:

  • treat everything you say in confidence
  • never judge you or make you feel bad about your situation
  • always be happy to talk to you, however small or big your problem is
  • suggest ways of dealing with debts that you might not know about
  • check you have applied for all the benefits and entitlements available to you
  • give advice about better ways of managing your money

“It is a scary thing to pick up the phone and say you have debt problems, but most people feel a huge sense of relief when they do.”

Debt Camelopens in new window – personal finance and debt blogger.

You may only need to have one conversation with an experienced debt adviser to make sure that your plan to manage or clear your debts is the right one for you.

If you need more support or don’t know where to start, you’re not alone.

Nearly half of people in debt tell us they aren’t sure about the best way to pay off their debts, and that is where a debt adviser can really help you.

More than eight out of ten people who have got debt advice tell us they feel less stressed or anxious and more in control of their life again.

“Debt advice just changed the way I dealt with it. Getting rid of the shame. I am only sorry it took me so long.”

A debt advice client.

The people that let debt build up before they seek advice often find things have spiralled out of control, their cards are maxed out, no-one else will lend to them and it takes much longer to pay back what they owe.

You can contact a debt adviser in a way that’s best for you – online, over the phone or face-to-face.

So join one of the hundreds of thousands of people we help each year and take the first step to being debt free.

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