What is a debt relief order (DRO) & how does it work?
A debt relief order (DRO) is a way of dealing with relatively small debts if you’re not a homeowner, you don’t own anything of much value and you have very little disposable income.
What's in this guide?How does a DRO work?Who can apply for a DRO?What debts can be included in a debt relief order?What does a DRO mean for my credit rating?
How does a DRO work?
If you can’t afford to pay your debts and you meet the criteria, you may be able to apply for a debt relief order.
A DRO lasts for 12 months. During that time, the debts included in your DRO are frozen and you don’t need to make payments.
At the end of the 12 months, if your financial situation hasn't improved, those debts are written off.
Who can apply for a DRO?
You may be able to apply for a debt relief order if you:
- can’t pay your debts
- owe £30,000 or less
- have £75 or less left over each month after covering your essential household expenses
- aren't a homeowner
- don’t have savings or possessions worth more than £2,000 (not counting basic household items or tools you need to do your job)
- haven’t had a DRO in the last six years
- don’t have an IVA and you’re not going through bankruptcy
- lived, had a property, or worked in England or Wales in the last three years
What debts can be included in a debt relief order?
Most non-priority debts can be included in debt relief order. A debt is either priority or non-priority depending on how serious the possible consequences are if you don’t pay.
The possible consequences of not paying non-priority debts are less serious than for priority debts. Despite being less serious, your creditors could still take you to court or arrange for bailiffs to visit you.
The main non-priority debts that can be included in a DRO are:
- credit cards
- hire purchase agreements that aren’t for essential items (e.g. a TV)
- unsecured loans (where you don’t use your home as security)
- buy now pay later
- store cards
- water bill arrears
- money borrowed from friends and family
23 Nov 2023
As a carer, you may be entitled to certain benefits. In this guide, we outline those benefits and explain if you’re eligible and how to apply.
31 Oct 2023
Find out when an IVA might be a suitable option for you, the benefits of an IVA and the things you need to bear in mind, as well as alternatives to an IVA.
31 Oct 2023
Find out the steps of how to go bankrupt, including filing for bankruptcy and what you’ll need to do once you’re declared bankrupt.
31 Oct 2023
If you receive an unexpected lump sum during your IVA, you may be able to use it to pay off your IVA early.