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How will a DRO affect me

Debt relief order. Rules and restrictions

If your debt relief order (DRO) application is accepted, there are some things that will happen that you need to be aware of. You’ll get protection from creditors included in the DRO, but there are also certain restrictions you’ll face.

DROs are designed for people with few assets and a relatively low level of debt. You won’t qualify if you’re a homeowner or if you have more than £50 a month left over after your essential living costs.

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How long does a DRO last?

A debt relief order will usually last for 12 months and this is called the ‘moratorium’. Your creditors, the people you owe money to, are prevented from taking any action to recover any of the debts included in your DRO during this time.

Your creditors can still contact you to tell you how much you owe, but they can't demand payments from you or start any court action. If they do you should tell them you’re on a DRO. If any of your creditors persistently call or threaten you with further action, you can contact the DRO unit at the Insolvency Service.

When the 12 month period ends, as long as your financial situation has not improved, the debts included in the DRO are written off.  

However, you’ll need to continue to pay your current household bills and living costs such as rent, council tax, electricity, gas and water rates.

Debt relief order restrictions

While you’re on a DRO there are certain things you can’t do. These are called restrictions.;

You must not:

  • Take out credit over £500 without telling the lender you’re on a DRO
  • Carry on a business under a different name without revealing that your previous business was subject to a DRO
  • Set up a limited company or act as a company director without permission from a court. 

Debt relief restriction undertaking or order

If the Insolvency Service believes you’ve been intentionally dishonest, they can apply for a debt relief restriction undertaking or order (DRRU or DRRO). This can extend these restrictions for up to 15 years.

What happens if my circumstances change during a DRO?

If your circumstances improve, you must notify the official receiver who will decide whether your DRO can continue, for example;

  • if your income improves or,
  • if you receive a lump sum of money or any assets

Find out how assets affect a debt relief order.

Will a debt relief order be listed on an insolvency register?

If you live in England and Wales, your DRO and details such as your name and address will be listed in the Individual Insolvency Register (IIR). Your details will be listed for the duration of the DRO (12 months) and removed three months after your DRO ends.

If you live in Northern Ireland, your details will be registered on the public DRO Register. The information will be removed from the register three months after the DRO has ended, whether it's been successful or revoked.

An application can be made to keep your address details off the Individual Insolvency Register or the DRO Register in exceptional circumstances, for example where there’s a risk of domestic violence or other personal harm.

Your DRO will be on your credit file for six years from the date it's approved.

Can a DRO affect my job?

DROs may affect some jobs if the employment contract specifies that you can't be insolvent. This is most likely to be an issue in the finance and legal sectors, but other jobs may also be affected. In our experience this is not common.

If you’re unsure about whether you’ll be able to keep your job if you have a DRO, check your employment contract or speak to your professional membership body or trade union, or speak to your HR department confidentially.

Find out more about how a DRO can affect you.

Can a debt relief order be cancelled?

The official receiver can terminate the DRO if they discover you intentionally misled them in your original DRO application.

It’s your responsibility to inform the official receiver of changes in your circumstances. It’s an offence to give away or hide assets from the official receiver, and you must co-operate with the Insolvency Service if they ask you to provide information.

If your DRO is cancelled, you’ll need to start making payments again towards any debts that were included.

Get free advice about whether a DRO is right for you

If you're considering a DRO, we can help. use our free online debt advice tool and we'll recommend the best solution for your situation. Alternatively you can contact our free Helpline (free from all landlines and mobiles).