Understanding the Debt Relief Order (DRO)
A Debt Relief Order (DRO) is a formal insolvency solution introduced in 2009, designed for people in England, Wales or Northern Ireland who have relatively low levels of debt, little or no assets, and very low disposable income. It is applied for through an authorised debt adviser (not directly through a court) and costs just £90.
A DRO creates a 12-month moratorium — during which creditors cannot take action against you and no payments are made. If your financial situation has not materially improved after 12 months, all included debts are written off. It is sometimes called a 'mini bankruptcy' due to its simplicity and low cost, though important eligibility thresholds apply.
How Does a DRO Work?
You must have debts under £30,000, assets under £2,000 (car under £4,000), disposable income under £75/month, and be a resident of England, Wales or NI.
DROs cannot be applied for directly — you must use an approved intermediary (usually a debt charity such as StepChange).
The only cost is a £90 application fee paid to the Insolvency Service. This can be paid in instalments.
Creditors are legally prevented from contacting you or taking enforcement action for 12 months. No payments are made.
If your situation hasn't improved after 12 months, all included debts are legally written off. The DRO is recorded on the insolvency register.
Pros & Cons of a DRO
Advantages
- Very low cost — just £90
- Debts are written off after 12 months
- Creditors cannot contact you during the moratorium
- Quick process — no court appearance needed
- No monthly payments required
- Suitable for those with very low income
Disadvantages
- Strict eligibility — debts under £30,000, assets under £2,000
- Disposable income must be under £75/month
- Appears on public insolvency register for 6 years
- Cannot be a homeowner (or have significant equity)
- Certain debts excluded (student loans, fines, CSA)
- Restrictions on obtaining credit over £500 during DRO
Who is a DRO Best For?
A DRO is ideal for people with debts under £30,000, no significant assets, very low income, and who cannot afford even the monthly payments of an IVA. It is not suitable for homeowners, those with savings or valuable assets, or people with debts above the threshold.
DRO vs IVA — Detailed Comparison
This table compares key features of both solutions. Your individual circumstances determine which is most suitable — always seek regulated advice.
| Feature | DRO | IVA |
|---|---|---|
| Legally binding on creditors | Yes | Yes |
| Debt written off at end | Yes — after 12 months | Yes — after 60 months |
| Maximum debt level | £30,000 | No upper limit |
| Monthly payments required | None | Yes — based on disposable income |
| Disposable income limit | Under £75/month | Must have regular income |
| Homeowners eligible | Generally no | Yes (equity considered) |
| Setup cost | £90 | Included in monthly payments |
| Typical duration | 12 months | 60 months |
| On public insolvency register | Yes | Yes |
| Affects credit file | Yes — 6 years | Yes — 6 years |
IVA column highlighted for reference. Figures are general guidance only.
Our Verdict
If you qualify for a DRO, it is often preferable to an IVA — it is faster, cheaper, and requires no monthly payments. However, the strict eligibility criteria mean many people do not qualify. If your debts exceed £30,000 or you have regular disposable income, an IVA is likely the more appropriate route.
Free advice: DROs must be applied for through an authorised intermediary such as StepChange or Citizens Advice — never through a commercial company charging fees for this service.