What is a dro?

A Debt Relief Order (DRO) is a statutory solution designed for individuals with low value debts, low incomes and few assets as an alternative to bankruptcy where their financial circumstances have little prospect of improving. A DRO is available in England & Wales. 

DROs are very different to other insolvency procedures. No distributions are made to an individual's creditors (the people or organisations to whom they owe money), and the individual in the DRO retains control over their assets. DROs are overseen by the Official Receiver, with applications made via an authorised debt advisor. The Government provides a list of organisations through whom individuals can find an authorised debt advisor here.

A DRO lasts for 12 months, during which the individual's debts and interest are frozen, and creditors are unable to take enforcement action to collect debts. At the end of the DRO, the individual's debts are written off.

An individual covered by a DRO will be subject to some restrictions, outlined below.

It is free to apply for a DRO.

Am I eligible for a DRO?

To enter a DRO, an individual must owe less than £50,000, have less than £75 in spare income every month, have under £2,000 in assets (excluding the value of a motor vehicle worth up to £4,000), and must not have applied for a DRO within the last six years. In addition, the debtor must have lived or worked in England & Wales in the last three years.

What restrictions are there in a DRO?

The restrictions placed upon people in a DRO are similar to those placed upon people in bankruptcy. These include not being allowed to act as a company director, borrow over £500 without telling the lender about the DRO, and creating or promoting a company without court permission.

As with bankruptcy, restrictions can be extended in certain situations (with a Debt Relief Restrictions Order or Undertaking). Restrictions are usually extended where there has been dishonest behaviour.

While in a DRO, an individual's details are included on the Individual Insolvency Register. Details are removed from the register three months after a DRO ends. Details of a DRO stay on a credit record for six years.

Can a DRO be cancelled?

A DRO can be cancelled if an individual does not cooperate with the Official Receiver, or if their finances improve during the DRO.

Are all debts covered by a DRO?

Like bankruptcy, some debts are not wiped clean by a DRO: student loans or court fines must still be paid after the end of a DRO. Ongoing bills need to be paid during a DRO, too.

Furher information

An R3 creditor's guide to DROs is available here.