About debt relief orders

This is a way of cancelling, or 'writing off' your debts. You will not have to deal with the people you owe money to, also called 'creditors'.

There is no fee to pay to apply for a DRO.

Your debts will be cancelled 12 months after the DRO is approved.

How does it work?

Your approved intermediary will let you know everything you need to do. An approved intermediary is an organisation that deals with DRO applications.

Once they have everything they need from you, they will create your application and tell you about the next steps.

Why a DRO is available to you:

• Your debts are less than £50,000
• You have less than £75 a month left over to pay back your debts each month. This is after your household bills and living costs
• You do not own a vehicle worth more than £4,000 (or £2,000 in Northern Ireland)
• You have less than £2,000 in other items of value, known as 'assets'
• You haven’t had a DRO within the last six years
• When you apply for a DRO, you must still meet the rules, or conditions, to be eligible

DRO and fraudulent debt

A DRO will not cancel any debts you got fraudulently. Like a debt from benefit fraud. Your creditors may get in touch about these, and you’ll have to pay back what you owe.

What you should be aware of about a DRO:

• Your approved intermediary cannot start your application until they have all your information
• Your DRO might not be accepted if you have paid some debts but not others, or if you have got rid of any items of value (assets) for less than they were worth in the last two years
• You must put all your debts in your application
• Your DRO is kept on a public register for 15 months
• Your DRO stays on your credit file for six years after it starts
• Your DRO could end if your finances get better.
• During the 12-month period after your DRO is approved, (called the moratorium period) you are protected from your creditors. Your creditors might still send you statements of what you owe. But they cannot ask for you to pay
• If your DRO is approved, you cannot apply for another DRO for six years
• You must tell the Insolvency Service if there is a change in your address or circumstances
• Creditors have 30 days from the date your application is approved to object to your DRO. They can only object if they do not think you are eligible for a DRO, or if they think that you borrowed money with no intention to pay it back
• You could be prosecuted if you break the DRO rules

Important information about DROs

Rules of a DRO

There are some things you must agree to when you apply for a DRO.

You have to:

• Tell the truth about the money you make, the money you owe, and the things you own (like assets)
• Co-operate if you are asked for information
• Tell the Insolvency Service about any changes they need to know about, for example moving house or changes to your income

You must not:

• Borrow more than £500 during the 12-month moratorium period without telling the lender you have a DRO
• Set up a limited company or act as a company director
• Change the name of your business without telling people you have a DRO, if you are self-employed

The conditions can be extended

Although unlikely, conditions may be put in place for up to 15 years.

This is called a debt relief restrictions order and can happen if you have not told the truth about something on your DRO or you are to blame for your financial position. The reasons or this are for things like fraud or neglect of business affairs.

Your DRO could be cancelled

Your DRO could be cancelled if you do not meet the criteria when it was approved, or you no longer meet the criteria during the 12-month moratorium period. This can happen if:

• You have more than £75 left over to pay back what you owe each month
• You are found to have other debts you did not tell your approved intermediary about
• You have assets that mean you are not eligible for a DRO. Like having money left behind in a will.

Your DRO will be recorded on a public register

Your DRO will be kept on a public register for 15 months. This is online for anyone to view. It may also affect your credit file.

DROs and your home

If you have a tenancy agreement you should check it before applying. Some have DRO clauses.

This gives the landlord the right to either:

• End your tenancy
• Refuse to renew or continue your tenancy.

Your landlord will be told about your DRO if you have rent arrears. They could also check your credit file.

A DRO can also make it harder to get a new tenancy further down the line.

DROs and your job

Some jobs are affected by having a DRO. You should find out if there are any risks to your job before you move forward with a DRO.

This is usually only when you are in control of other people's money, like solicitors and some jobs in financial services.

To check this, you can either:

• Check the terms and conditions of your contract
• Speak to your employer, trade union or relevant membership body

DROs and your bank account

Your bank could treat your account differently once you have a DRO. They will not be told you have a DRO unless you have debts with the same bank.

But, if your bank account is not overdrawn you should contact your bank and ask if you can carry on using it if your DRO is approved.

If you have an overdraft you need to open a basic bank account for your daily banking. You should do this before getting a DRO.

It is simple to apply for a basic account with another bank. If your current bank is happy to give you a basic account you may be able to stay with them.

Find out more about basic bank accounts and how they affect your debt solution.

DROs and your pension

You may be thinking about taking money out of your pension. A DRO does not treat the money you have saved in a pension as an asset (something of value). This means it is not affected.

During your DRO, you can usually continue paying reasonable amounts into a pension. If during your 12-month moratorium you start to receive or release money from a pension, this may impact your DRO. You may need to review your DRO to make sure you’re still eligible.

DROs and Lasting Power of Attorney (LPA)

If you have a Lasting Power of Attorney, you must cancel this if you go ahead with a DRO.

Please tell us and your approved intermediary about this, so you get the right help.