A Debt Relief Order (DRO) is a formal debt solution used in the UK for people with low income, few assets, and relatively low levels of debt. It is designed to give temporary relief from creditor action where other solutions may not be suitable.
This page explains what a DRO is, how it typically works, the eligibility rules, and the types of situations in which a DRO is commonly considered. It is provided for general information only and does not offer advice or recommendations.
What Is a Debt Relief Order (DRO)?
A Debt Relief Order is a form of insolvency that freezes eligible debts for a fixed period, usually 12 months. During this time, creditors included in the DRO cannot take action to recover the debt.
If the individual’s financial circumstances do not improve during the DRO period, the debts included are usually written off at the end of the 12 months.
DROs are often compared with other formal solutions such as Individual Voluntary Arrangements (IVAs).
How a DRO Typically Works
Although each case is assessed individually, the DRO process usually follows these steps:
- Financial circumstances are reviewed to check eligibility
- An application is submitted through an approved intermediary
- If approved, eligible debts are frozen for 12 months
- Creditors are prevented from taking enforcement action
- At the end of the period, debts are usually written off if circumstances have not improved
There is no requirement to make monthly repayments during a DRO.
Who DROs Are Commonly Used For
DROs are more commonly explored by people who:
- Have a low or irregular income
- Have very limited assets
- Owe debts below the DRO limit
- Have little or no disposable income
Eligibility is strict and must be met at the time of application. They are most commonly associated with low income or benefit-based situations.
Eligibility Rules and Limits
To qualify for a DRO, individuals must meet specific criteria, which typically include limits on:
- Total debt level
- Value of assets
- Monthly disposable income
These limits are set by regulation and can change over time.
What Debts Are Usually Included in a DRO
DROs usually cover unsecured debts, such as:
- Credit cards
- Personal loans
- Overdrafts
- Utility arrears
- Catalogue debts
Certain debts, including some fines and secured lending, are not usually included.
Impact on Credit Files and Public Records recorded on credit files, which can affect access to financial products.
A DRO is recorded on credit files and on the Individual Insolvency Register. These records can affect access to credit, housing, and some financial products for several years.
What Happens If Circumstances Change
If income or assets increase significantly during the DRO period, the DRO may be reviewed or cancelled. Individuals are required to report changes in circumstances during the 12-month period.
This often follows a period of missed payments or financial difficulty.
Important Information
This website provides general information only and does not offer legal, financial, or debt advice. Debt Relief Orders are regulated debt solutions and suitability depends on individual circumstances. Always seek advice from a qualified, authorised professional before making decisions about your financial situation.