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How Does a DRO Work?

When you find yourself in a difficult financial position, there are a few actions you can take to try and help yourself out of it. Bankruptcy is an obvious choice in certain circumstances, but it is an expensive option with current fees of £680 (in England and Wales). So what is the solution for people in a lower income bracket who have fewer assets, and can’t afford to file for bankruptcy? The answer could be a Debt Relief Order (DRO).

What is a Debt Relief Order?

A DRO is a financial relief option for people who meet a very specific set of criteria, including low assets and low disposable income.

Requirements for a DRO

  • Your total debt must be under £30,000 (England, Wales) or £20,000 (N-Ireland)
  • Your monthly surplus after bills and living expenses must be under £75 (England, Wales) or £50 (N-Ireland)
  • You must not own property
  • Your total asset value must be under £2,000 (England, Wales) or £1,000 (N-Ireland)
  • If you own a vehicle, its value must be under £2,000 (England, Wales) or £1,000 (N-Ireland)
  • You may not apply within 6 years of a previous successful DRO application

How Do I Apply for a DRO?

To apply for a DRO, you will need to meet with an approved intermediary – a specialist adviser who will review your situation and determine whether you are eligible. If they agree that you are eligible, they will assist you in filling out your application and ensuring that all your information is correct. You can find an adviser through one of the following organisations:

Once your application has been completed and your DRO fee of £90 is paid in full, your application will be sent to an Official Receiver at the Insolvency Service. The receiver will review your application, and accept it if all is in order, defer it if they feel they need more information, or reject it if they decide you are not eligible or you have provided false information.

What Happens After Your DRO is Accepted?

Once your DRO has been accepted, there are a few responsibilities and restrictions that it is essential you bear in mind and act on:

  • You must report changes in circumstances to your Official Receiver, including information on your application form (like change of address), increase in income, and additional money or assets received (like lottery winnings and inheritances)
  • If you apply for credit over £500, you must inform the lender about your DRO
  • If you run a business under a different name, you must inform all business associates of the name used to file for your DRO
  • You may not act as a company director
  • You may not manage, promote, or set up a limited company without receiving permission from the court

Should your circumstances change, your DRO will be reviewed, and if it is determined that you are now able to repay your debts, your DRO will be stopped, and you will, once again, be responsible for your debts.

If, however, your circumstances do not change while your DRO is in place, 12 months after the approval of your DRO, all debts covered in the agreement will be written off, and you will experience financial freedom. Be aware, however, that your details will have been added to the Individual Insolvency Register, and your DRO will stay on your credit file for 6 years from successful application.

What Debts are Covered by a DRO?

Debts covered by your DRO could include:

  • Credit cards, overdrafts, and loans
  • Arrears on rent, utility bills, phone bills, council tax, and income tax
  • Benefits overpayments
  • Hire purchases and conditional sale agreements
  • Buy now, pay later agreements
  • Service bills
  • Debts owed to family and friends
  • Business debts

Debts that will not be covered by your DRO include:

  • Child maintenance
  • Student loans
  • TV licence arrears
  • Fraudulently-acquired debts
  • Criminal and magistrate court fines
  • Loans from DWP Social Funds

What are the Pros and Cons of Getting a DRO?

As with all debt relief options, there are a number of pros and cons to getting a DRO to help you through the tough times.


  • The fee for applying for a DRO is only £90, and can be paid in instalments
  • A DRO lasts only 12 months, and is a quick way to become financially free
  • During your DRO you will not be required to make any financial contributions – repayments on all qualifying debts are frozen for the duration.
  • All interest and charges on your debts will be frozen during your DRO
  • You will keep all your assets, including your car if it is under the required value
  • Your creditors cannot take action against you or contact you while your DRO is in place, and after completion of the DRO all included debts are written off
  • You do not have to appear in court to arrange your DRO
  • A DRO is significantly less expensive than filing for bankruptcy


  • You cannot apply for a DRO until the £90 fee is paid in full
  • This is a formal arrangement, and must be applied for through an authorised representative
  • You will not qualify for a DRO if you have an existing IVA or bankruptcy order, or if you have successfully applied for a DRO in the last 6 years
  • You must meet all of the eligibility criteria to apply for a DRO – debt value, asset value and disposable income level
  • If your financial situation changes during the course of your DRO, it could be revoked, making you responsible for your debts again
  • Your DRO will be recorded on the Individual Insolvency Register, and will be on your credit file for 6 years
  • A DRO will have a negative impact on your credit report
  • If your DRO application is rejected, you will lose your application fee.

When trying to decide which debt relief solution is right for you, it is always best to be fully informed, and to get personal advice about your unique situation. Reach out to the non-judgemental team at Debt Movement for impartial debt guidance and solutions.

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