A Debt Relief Order (DRO) is a formal insolvency option designed for people who owe relatively small amounts, have very little spare income, and own few or no significant assets. It's often described as a lower-cost, lighter-touch alternative to bankruptcy, and for the right circumstances it can offer a genuine way to draw a line under unmanageable debt.
What a DRO does
Once approved, a DRO freezes the debts included in it for a set period (typically around 12 months). During that period, the creditors listed can't take further action to recover the debt, chase you for payment, or add interest and charges. If your financial situation hasn't improved by the end of that period, the debts included are normally written off completely.
Who qualifies
DROs are aimed specifically at people with limited means, and the qualifying criteria are strict. Broadly, you're likely to be considered if:
- Your total qualifying debt is below a set limit
- Your disposable income after essential living costs is very low each month
- The value of your assets (savings, valuables, and equity in belongings — not including some protected items like basic household goods or a modest car) is below a set limit
- You've lived or worked in the relevant UK jurisdiction recently
- You haven't had another DRO within a set recent period, and you're not already in another formal insolvency procedure
These thresholds are set by the government and can change, so check the current limits before assuming you do or don't qualify.
What a DRO covers — and what it doesn't
Most everyday unsecured debts can typically be included — credit cards, overdrafts, personal loans, utility arrears, and some benefit overpayments, for example. Certain debts generally can't be included, such as:
- Court fines and some other court-ordered payments
- Child maintenance arrears
- Some student loan debt
- Debts arising from fraud
- Some secured debts, such as a mortgage on your home
How a DRO differs from bankruptcy
| Feature | Debt Relief Order | Bankruptcy |
|---|---|---|
| Typical cost to apply | Lower, fixed fee | Higher fee |
| Suited to | Low debt, low income, few assets | No fixed debt ceiling; can include higher debts and more assets |
| Asset risk | Minimal, given low qualifying limits | Higher-value assets can be sold to repay creditors |
| Duration of restrictions | Around 12 months typically | Usually around 12 months to discharge, sometimes longer |
Effect on your credit file
A DRO is recorded on your credit file and is visible to lenders for a number of years (broadly similar in length to other serious insolvency records), which will make it harder to get credit, and typically more expensive when you can, during that time. While the DRO restrictions themselves usually apply for around 12 months, the record on your credit file lasts considerably longer.
Common misconceptions
- That a DRO wipes out all debts, including things like child maintenance and court fines — it doesn't cover every debt type.
- That applying is free — there's typically a modest fixed fee, usually payable through an approved debt adviser or intermediary rather than directly to a court.
- That a DRO is a quick fix with no consequences — it has a real and lasting effect on your ability to access credit, and breaching the restrictions (such as taking on new large debts without disclosing the DRO) can have serious consequences.
What to do next
A DRO must be applied for through an authorised debt adviser, not directly — organisations such as StepChange, National Debtline, or Citizens Advice can assess whether you meet the criteria and help you apply, free of charge. It's worth getting that free advice before assuming a DRO is or isn't right for you, since other options like an Individual Voluntary Arrangement or informal repayment plan may suit your situation better.