What is a Debt Relief Order and who can apply for one

A Debt Relief Order, commonly called a DRO, is a formal insolvency solution for people who cannot pay their debts but also have very little income and few assets. It freezes your debts for twelve months during which creditors cannot chase you for payment, and if your situation has not improved by the end of that period, the debts included in the order are written off completely.

Who can apply

To be eligible for a Debt Relief Order you need to meet a set of criteria. Your qualifying debts must be no more than thirty thousand pounds. Your surplus income — what is left after essential living costs — must be no more than seventy-five pounds per month. Your total assets must be worth no more than two thousand pounds (with some exceptions for tools of the trade and a vehicle up to a certain value). You must be domiciled in England, Wales, or Northern Ireland, or have lived or worked there in the past three years. You must also not have had a DRO, been bankrupt, or had an IVA within the last six years.

What debts are included

Most consumer debts can be included — credit cards, overdrafts, personal loans, catalogue debts, utility arrears, and council tax arrears. Some debts cannot be included regardless of the circumstances: student loans, fines, child maintenance arrears, social fund loans, and debts incurred through fraud. Secured debts like mortgages are also excluded, though a DRO can free up income that helps with these.

How to apply

You cannot apply for a DRO directly — it must go through an approved intermediary, who is usually a debt adviser at a free debt advice organisation such as StepChange, National Debtline, or Citizens Advice. They will assess your eligibility, help you complete the application, and submit it to the Insolvency Service on your behalf. There is a ninety pound fee to apply, though the intermediary service itself is free. The fee can sometimes be paid in instalments if it cannot be managed in one payment.

What happens during and after the order

During the twelve-month moratorium period, creditors included in the order cannot chase you for payment, take court action, or add interest and charges. You must live within strict financial limits and report any changes in your circumstances. After twelve months, if your situation has not materially improved, all included debts are written off. A DRO appears on your credit file for six years from the date it starts and affects your ability to get credit in that time, though many people in this situation already have severely damaged credit.