Debt Relief Order (DRO) — Full Guide
A Debt Relief Order (DRO) can write off debts up to £30,000 if you have little income and few assets. It lasts 12 months and is a real alternative to bankruptcy for people on very low incomes.
Who Can Apply for a DRO?
To qualify for a DRO you must:
- Owe less than £30,000 in total qualifying debt
- Have less than £75 spare income per month after essential spending
- Have less than £2,000 in assets (your car is excluded if worth under £2,000)
- Not own property (including jointly)
- Not have had a DRO in the previous 6 years
- Live or have lived in England or Wales
What Happens During a DRO
- Creditors cannot chase you for the listed debts
- No interest or charges are added
- You cannot get credit over £500 without telling the lender about the DRO
- The DRO lasts 12 months
After 12 Months
If your circumstances haven't significantly improved, the debts in the DRO are written off completely. The DRO stays on your credit file for 6 years from the date it was made.
How to Apply
You can only apply through an approved intermediary — usually a debt advice service such as:
- StepChange (0800 138 1111)
- Citizens Advice
- Christians Against Poverty
The application fee is £90, but some charities can help cover this.
DRO vs Bankruptcy
| DRO | Bankruptcy | |
|---|---|---|
| Max debt | £30,000 | No limit |
| Cost | £90 | £680 |
| Duration | 12 months | 12 months |
| Assets limit | £2,000 | No limit (but assets may be taken) |
| Property | Cannot own | Property may be sold |
Frequently Asked Questions
Does a DRO affect my credit score?
Yes. A DRO will appear on your credit file for 6 years and will make it harder to get credit during that time. However, if you already have defaults, a DRO may actually help by drawing a line under your debts.
Can I keep my car with a DRO?
You can keep your car if it is worth less than £2,000 and is reasonably necessary for your work or daily life. If your car is on finance, the finance company may reclaim it.
What debts are NOT included in a DRO?
Student loans, court fines, child maintenance, and most benefit overpayments cannot be included in a DRO. These debts will remain after the DRO ends.
Related Guides
What Happens If Your Credit Card Defaults
Learn what happens when a credit card defaults, how it affects your credit score, and what options you have. Plain-English guide with practical next steps.
Dealing with Debt Collectors — Know Your Rights
Understanding your rights when dealing with debt collectors in the UK. What they can and cannot do, and how to respond effectively.
Sources & Further Reading
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