Debt Relief Orders (DROs)

If you have very little spare income, a Debt Relief Order may be a better option than an IVA. There's no fee, and it's usually much quicker.

DRO eligibility in England and Wales

• Your qualifying debts are under £50,000.
• You have less than £75 a month spare income after essential costs.
• Your assets are worth less than £2,000 in total.
• You don't own a vehicle worth £4,000 or more.
• You have lived or worked in England or Wales within the last three years.
• You haven't had a DRO in the last six years.
• You generally don't own your home.

Northern Ireland has its own Debt Relief Order scheme with different limits. In Scotland, the similar option is the Minimal Asset Process (MAP) bankruptcy.

How to apply for a DRO

You can't apply for a DRO on your own. You must apply through an approved intermediary, a type of debt adviser authorised to submit DRO applications to the Insolvency Service. Free debt advice services can help you do this.

What happens during a DRO?

• Creditors included in the DRO can't chase you or take action to recover the debt.
• You don't make payments towards the included debts for 12 months.
• You must not borrow more than £500 without telling the lender about your DRO.
• If your circumstances improve significantly, for example a windfall, the DRO may be revoked.
• After 12 months, the included debts are written off.

DRO or IVA?

If you qualify for a DRO, it's usually better than an IVA: it's free, it's shorter and it writes off your debts after just a year. An IVA is more likely to suit people with higher incomes, larger debts or a home they want to protect. Both appear on your credit file for six years.

DRO or IVA if you're close to the limits?

Some people sit right on the edge of DRO eligibility. Their surplus might be £80 a month rather than £70, or their car might be worth just over £4,000. In these situations, small details can make a big difference, so have your figures checked carefully before assuming you don't qualify.

If you're just above the limits, an IVA may still be possible, but it would last five years rather than one. If you're just below, a DRO is usually the better choice. We'll help you see which side of the line you're on.

What counts as an asset for a DRO?

For a DRO, your assets must be worth less than £2,000 in total, not counting a vehicle worth under £4,000. Assets include savings, money in your bank account above what you need for essential bills, and items of significant value. Ordinary household goods and the tools you need for work aren't usually counted. If you own your home, you generally won't qualify.

Restrictions during a DRO

A DRO comes with restrictions for its twelve-month term. You must tell lenders about your DRO if you try to borrow £500 or more, and you can't act as a company director without permission from the court. If you run a business, there are rules about trading under a different name. If your circumstances change significantly, for example through a pay rise or windfall, you must report it, and the DRO may be revoked.

How long does a DRO stay on my credit file?

A DRO is recorded on your credit file for six years from the date it's made. It also appears on the public Insolvency Register while it's in force and for three months afterwards. That's similar to an IVA, but because a DRO lasts only twelve months, you can start rebuilding your finances much sooner.

Can I get a DRO if I'm already in another debt solution?

You can't apply for a DRO while you're bankrupt or in an IVA, and you can't apply if you've had a DRO in the last six years. If you're on an informal Debt Management Plan, you can still apply, provided you meet the criteria. If your IVA has failed or ended, a DRO may become an option, and we can help you check.

What if I need my car?

You can keep a vehicle worth less than £4,000. A vehicle that has been specially adapted because of a disability isn't counted, whatever its value. If your car is worth more than £4,000, you won't usually qualify, and an IVA may be the better route if you need it for work.

Let us check your figures

If you're not sure whether a DRO or an IVA is right for you, fill in the form at the top of the page. We'll go through your debts, income and assets and explain which option fits. If a DRO is the answer, we'll tell you how to apply free of charge through an approved intermediary.

It helps to have a rough idea of your monthly income, your essential bills, the value of anything you own and a list of your debts when we speak. Don't worry if you're unsure about some figures. We'll go through them with you, and if anything is borderline, we'll explain what difference it makes.