A Debt Relief Order (DRO) is a formal insolvency solution for people in England and Wales who cannot repay their debts and have little income or assets. GOV.UK says it normally lasts 12 months, after which the debts listed in it no longer have to be repaid. It is not available in Scotland or Northern Ireland, where different solutions apply. It is one of several options, and free debt advice is the place to compare them.
How you apply
GOV.UK says you must apply through an approved debt adviser, who checks your eligibility free of charge and completes the online application for the Insolvency Service; you cannot complete it yourself and you do not go to court. There is no application fee. The adviser will look at your income, debts and belongings, payments made to creditors over the past two years, and anything sold or given away in that period.
If a DRO is not suitable, GOV.UK says the adviser will help you find other ways of dealing with your debts, and it points to MoneyHelper for organisations that offer free debt advice.
Who is eligible
According to GOV.UK you qualify if you owe less than £50,000 in total; have savings or valuable items worth less than £2,000 in total; own a vehicle worth less than £4,000; do not have enough money left at the end of the month to make your debt repayments; have lived or worked in England and Wales in the last three years; are not currently bankrupt or in an interim order or individual voluntary arrangement; and have not had a DRO in the last six years. You also must not have favoured some creditors (preferential payments) or sold or given away valuables for less than they were worth (undervalue transactions), both of which can affect eligibility.
Which debts are included
GOV.UK lists “qualifying debts” as including credit cards, overdrafts and loans, rent arrears and utilities, council and income tax, buy now pay later agreements, benefit overpayments and debts to friends and family. Debts you must still pay include child maintenance, student loans, Social Fund budgeting and crisis loans, debts secured against your possessions, court-ordered damages for personal injury or death, and unpaid TV licence fees. A creditor can still recover a debt from a guarantor or joint debtor.
Restrictions and the effect on your credit file
During the DRO period GOV.UK says you must tell a lender before borrowing more than £500, tell banks about the DRO if you apply for an overdraft or new account, and follow restrictions such as not acting as a company director or forming or managing a company without the court’s permission. You cannot apply for another DRO for six years. The DRO stays on your credit reference file for six years from approval and appears on the Individual Insolvency Register, from which it is removed three months after it ends. You still pay regular commitments such as rent and bills.
If your situation changes or creditors keep asking
You must tell the Insolvency Service about an increase in regular income or valuables you receive. It can cancel a DRO if you no longer qualify or were never eligible; if that happens, the debts you owed are payable again with interest accrued, and creditors can add penalties, even after the DRO has ended. Listed creditors should stop demanding payment; if one continues, GOV.UK says to send a copy of your DRO and use its complaints process. Creditors may still send balance statements for 12 to 18 months as the law requires, and debts sold to collection agencies remain covered if they were listed.
The Insolvency Service says it will not submit a complaint on your behalf and has no power to make a creditor stop asking for repayment, so the creditor’s own complaints process, and where relevant its regulator, is the route if demands continue.
FAQs
Can I add a forgotten debt to my DRO?
No. GOV.UK says that after a DRO is approved no other debts can be added, and you must keep paying any debt not listed.
Does a DRO mean I can never borrow again?
No. GOV.UK lists restrictions during the DRO period and says the DRO shows on your credit file for six years, which may make borrowing harder, but it does not impose a lifetime ban.
Can I apply if I live in Scotland?
GOV.UK says you cannot apply for a DRO if you live in Scotland or Northern Ireland, and a debt adviser can explain what is available there.
Bottom line
A DRO can clear qualifying debts, including loans and credit, for people in England and Wales with low income and few assets, but it comes with restrictions and a six-year credit file entry. Ask an approved debt adviser, free of charge, whether it beats alternatives such as a debt management plan. This article is general information, not financial or legal advice.