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Debt Relief Orders
A Debt Relief Order (DRO) is a form of insolvency designed to help people in England and Wales with relatively\u00a0low debt,\u00a0little surplus income\u00a0and\u00a0few valuable assets.
A DRO is similar to going bankrupt, but for people with income and assets of value low enough to be excluded from bankruptcy, so the process is less complex and cheaper.
DROs were introduced because the fees to petition for your own bankruptcy (currently \u00a3680) meant many people for whom bankruptcy was the best solution were unable to afford to do so. Since June 2024, DROs are completely free to apply for, making them more accessible than ever.
Getting A DRO
You apply for a DRO through an approved intermediary. This is a person granted special permission by the Insolvency Service to process DRO applications. Approved intermediaries are typically found at free debt advice organisations such as Citizens Advice, StepChange or National Debtline.
- Be unable to afford current repayments and charges
- Owe no more than \u00a350,000 in qualifying debts
You must include ALL your debts. You cannot selectively write off part of a larger total by a DRO. - Have assets totalling no more than \u00a32,000 excluding a motor vehicle
Only non-essential items that can easily be sold are taken into account. You can own a car worth up to \u00a34,000. - Have a disposable income of no more than \u00a375 per month
This is your income minus reasonable living expenses, not counting your debt repayments, as defined using the Standard Financial Statement guidelines. - Have lived or worked in England or Wales within the last 3 years
- Have not had a DRO within the last 6 years
- Not be subject to any other current formal insolvency procedure, including a bankruptcy petition that has not been dismissed, unless the person who presented the petition agrees to you entering the DRO.
- Not currently subject to a\u00a0BRO/BRU\u00a0or a DRRO/DRRU
The qualifying debt threshold was increased from \u00a330,000 to \u00a350,000 in June 2024, and the vehicle allowance rose from \u00a32,000 to \u00a34,000 at the same time. These changes mean significantly more people now qualify for a DRO.
DRO Benefits
Completely free
There is no fee to apply for a DRO. Previously the fee was \u00a390, but this was removed in June 2024. By comparison, a bankruptcy application costs \u00a3680.
Professional guidance
The process ensures you receive suitable advice from an approved intermediary who checks you meet the criteria before proceeding.
All qualifying debts written off
A DRO lasts for 12 months, after which all included debts are written off and you get a fresh start.
Creditor protection
Creditors included in a DRO cannot take action against you without a very good reason and the Court’s permission.
You will remain liable to pay certain debts, in particular: student loans, court fines, debts arising from family proceedings, budgeting loans and crisis loans owed to the Social Fund. For more detail, see our guide to debts not written off by insolvency.
DRO Considerations
These are mainly the same as bankruptcy considerations and restrictions, plus the following:-
Not for homeowners
You cannot apply for a DRO if you own a property, even if it is mortgaged and you have little, no or negative equity in it. If you own your home, bankruptcy or an Individual Voluntary Arrangement (IVA) may be more suitable.
Debt relief restrictions order (DRRO)
This can be issued if your behaviour is considered to have been reckless or deceitful, and can extend the restrictions of the DRO for up to 15 years.
Important:
If during the DRO your circumstances change such that you no longer qualify (for example, you can afford more than \u00a375/month towards your debts), you are legally obligated to inform the Official Receiver. The DRO will be revoked and you will be back where you started, remaining liable for the debts in full.
How Does A DRO Compare To Other Options?
A DRO is just one of several alternatives to bankruptcy. Depending on your circumstances, you might also consider:-
- Individual Voluntary Arrangement (IVA): suitable if you have a regular income and owe more than \u00a310,000
- Debt Management Plan (DMP): an informal arrangement to repay debts at a reduced rate
- County Court Administration Order (CCAO): available if your total debts are under \u00a35,000 and you have a county court judgment against you
- Bankruptcy: may be right if your debts exceed the DRO threshold or you own property
We do not currently provide DROs but offer a free consultation to determine your suitability and will refer you accordingly.
We’ll answer your questions to help you decide if going bankrupt is the right option for you.