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Debt Relief Orders - FAQ 

Please click on the relevant question to find a brief answer. If your question is not listed please e-mail your query to our Insolvency Enquiry Line at Insolvency.enquiryline@insolvency.gsi.gov.uk , or click here for an online form.

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What is a debt relief order (DRO)?

Are DROs just an easy way for people to run up debts then get them written off?

Can I apply for a DRO?

Do I need to go to court to get a DRO? 

How do I apply for a DRO?

How much does it cost to get a DRO?

How long does the DRO last?

Will a DRO free me from all my debts?

Will there be any restrictions on me during the period of my DRO?

Will my DRO be advertised?

Will I be able to keep my car? 

What if my car is worth £1,200 and my other assets are worth less than £100, will I be able to apply for a DRO?

How can I make a complaint?

How can I become an approved intermediary?

I think someone who has been granted a DRO did not give the correct information.   Can anything be done about this?

Where can I get further information?

 

 

Question    What is a debt relief order (DRO)?

Answer   It is a formal insolvency process for people who cannot pay their debts and who have  a relatively low level of debt, little surplus income and few assets. 

 

Question   Are DROs just an easy way for people to run up debts then get them written off?

Answer   No. DROs are a serious matter. DROs are aimed at people with no assets and a low income with no other access to debt relief and no prospect of the situation improving. If people do have assets or there is a possibility of an improvement in financial circumstances, a DRO is not an appropriate solution and other debt remedies are available.

 

 

Question   Can I apply for a DRO?

Answer   You must meet all the following requirements to apply for a DRO:

  • You must be unable to pay your debts.

  • Your total debts must be not more than £15,000.

  • Your total gross assets be must not more than £300, but see the question ‘Will I be able to keep my car?’, below.

  •  Your surplus income, after taking off normal living expenses, must not be more than £50 per month.

  • You must be domiciled (living) in England or Wales, or at any time during the last 3 years, have been resident or carrying on business in England or Wales.

  • You must not have previously been subject to a DRO within the last 6 years. 

  • You must not be involved in another formal insolvency procedure at the time of application for a DRO, such as:

a)  a current bankruptcy;

b)  a current individual voluntary arrangement;

c)  a current bankruptcy restrictions order or undertaking;

d)  a current debt relief restrictions order or undertaking;

e)  an interim order;

f)   where you are currently petitioning for bankruptcy (asking a court to make you bankrupt) if the court has not referred you to the DRO procedure as a more suitable method of debt relief;

g)  where a creditor is currently petitioning for your bankruptcy (asking a court to make you bankrupt), if you have not got the creditor’s permission before applying for a DRO.

 

Question   Do I need to go to court to get a DRO? 

Answer   No, the courts are not involved in DRO applications.  DROs are run by The Insolvency Service in partnership with skilled debt advisers, called approved intermediaries, who will help you to apply to The Insolvency Service for a DRO.

 

Question   How do I apply for a DRO?

Answer   By seeking financial advice from a debt adviser. If you appear to be suitable for a DRO, an approved intermediary (who may not be the debt adviser who gave you advice at first) will be able to help you complete the online application, once it is considered that a DRO is appropriate for you.

You cannot apply for a DRO without the assistance of an approved intermediary, who is someone who has been approved by one of the competent authorities.

Details of the competent authorities can be found here.

 

Question  How much does it cost to get a DRO?

Answer  The cost is currently £90.  If you cannot afford to pay in full immediately you can pay in instalments to suit your financial situation.  If you do this you must pay the full £90 within 6 months of paying the first instalment.  The fee must be paid in full before the official receiver will consider your application.

Your approved intermediary will tell you how to pay.

 

Question  How long does the DRO last?

Answer  The DRO will place a moratorium period upon the debts included in it. Creditors who are owed debts listed in the DRO cannot take any action for repayment of their debts during this moratorium without the permission of the court. Once this period has ended (usually after 12 months) the debts listed in the DRO will be discharged and you will be freed from those debts.

During the period of the DRO you must carry on paying ongoing commitments, such as rent and utility bills.  You will be responsible for any debts that you incur after a DRO has been approved but must not make any payments to any creditor who is included in the DRO.

 

Question   Will a DRO free me from all my debts?

Answer   Creditors cannot continue or start legal action against you for repayment of the debts that are included in your DRO.  After the period of the DRO has ended you will usually be free from these debts, except where a creditor has been given permission from the court to ask you for repayment of a debt.   

There are some debts that cannot be included in a DRO. You will still be responsible for paying these debts.  Briefly, the debts which cannot be included are:

  • magistrates’ court fines and any obligations from an order in family proceedings or under a maintenance assessment made under the Child Support Act 1991;
  • student loans;
  • any obligation under a confiscation order made under section 1 of the Drug Trafficking Offences Act 1986 or section 1 of the Criminal Justice (Scotland) Act 1987 or section 71 of the Criminal Justice Act 1988 or under Parts 2, 3 or 4 of the Proceeds of Crime Act 2002;
  • secured debts – a DRO does not affect the rights of secured creditors to deal with their security. However, if you own secured property you are unlikely to qualify for a DRO, as your gross assets are likely to be more than £300.
  •  

Question  Will there be any restrictions on me during the period of my DRO?

Answer   You  will be subject to similar restrictions as in bankruptcy.

These restrictions include:

  • You must not obtain credit of £500 or more, either alone or jointly with another person, without telling the lender that you are subject to a DRO.

  • You may not carry on a business (directly or indirectly) in a name that is different from the name under which you were granted a DRO, without telling all those with whom you do business the name under which you were granted a DRO.

  •  You may not be involved (directly or indirectly) with the promotion, formation or management of a limited company, and may not act as a company director, without the court’s permission.

  • You cannot apply for a  DRO if you have been subject to a previous DRO within the last 6 years.

The official receiver will be able to apply for a debt relief restrictions order, similar to the bankruptcy restrictions order, which will extend the period of restriction for up to 15 years if they find you have been dishonest before or during your DRO or that you are otherwise to blame for your position.

 

Question   Will my DRO be advertised?

Answer   Details of your DRO will be put on the Electronic Individual Insolvency Register on our website: www.insolvency.gov.uk/eiir/ . 

These details will be removed 3 months after your DRO has ended.

DROs are not advertised in your local paper or in the London Gazette. 

 

Question   Will I be able to keep my car? 

Answer   You will most likely to be able to keep it if:

  • it has been adapted for you because you have a physical impairment that has a substantial and long-term adverse effect on your ability to carry out normal day-to-day activities; or
  • if it is worth less than £1,000.
  •  

Question  What if my car is worth £1,200 and my other assets are worth less than £100, will I be able to apply for a DRO?

Answer  You will not be able to apply for a DRO as the maximum allowable value for your car is £1,000 and the £300 asset limit is for other assets.

 

Question  How can I make a complaint?

Answer   A competent authority is designated as competent by the Secretary of State.  One of the criteria for being designated a competent authority is that it has in place an accessible, effective, fair and transparent procedure for dealing with complaints about its functions as a designated competent authority, including complaints about:
  • any intermediary approved by it, or
  • the activities of any such intermediary.

 So if you have a complaint about your approved intermediary or their competent authority  you should contact the competent authority.

If you have a complaint about the official receiver you should follow the  procedure outlined in our leaflet ‘Complaints Procedure’ on our website: www.insolvency.gov.uk/pdfs/guidanceleafletspdf/complaints.pdf .

 

Question   How can I become an approved intermediary?

Answer   You can become an approved intermediary if you are a trained debt adviser and have been approved by a competent authority, so you must apply to one of the authorities. 

Your application must show that you meet the legislative criteria, which are set out in Part 2 of The Debt Relief Orders (Designation of Competent Authorities) Regulations 2009. 

You may need training to become an approved intermediary and the competent authority should tell you what is required.

 

Question  I think someone who has been granted a DRO did not give the correct information.   Can anything be done about this?

 

Answer   You should tell the official receiver who will look into any information you provide and can revoke the DRO if it is appropriate.

 

 

Question   Where can I get further information?

Answer   Questions about the official receiver’s role and the DRO process should be addressed to The DRO Unit, The Insolvency Service, telephone 01752 635200 or email to DRO.Unit@insolvency.gsi.gov.uk

 

 

More information on the legislation, consultations, working groups or policy on DROs can be found at www.insolvency.gov.uk/insolvencyprofessionandlegislation/DebtRelief.htm .
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