Debt Relief Orders

Debt Relief Orders (DROs) came into force on 6 April 2009, introduced under the Tribunals, Courts and Enforcement Act 2007. DROs are administrative rather than court-based, they are made by Official Receivers working in partnership with the professional debt advice sector.

The aim of a DRO is to provide a low-cost debt remedy aimed at the financially excluded who have relatively low levels of debt, little surplus income and few assets. DROs offer a workable debt relief remedy for those who cannot take advantage of other debt remedies (such as Individual Voluntary Arrangements (IVAs)) and where bankruptcy would be disproportionate. DROs provide a fresh start for vulnerable people trapped in debt.

To obtain a DRO the debtor must satisfy strict eligibility criteria. Once made, a DRO will freeze debt repayments and interest for 12 months. During this time creditors cannot take debt recovery action without the court’s permission (there is a strict moratorium). At the end of the year, the debtor will be free of all the debts listed in the order provided their circumstances have not changed. In effect, debts included in the DRO are written-off.

DROs are available in England and Wales, and Northern Ireland. In Scotland, a Minimal Assets Process (MAP) bankruptcy offers debtors a similar solution to a DRO, but has different benefits, risks and fees associated with it. It should be noted that individual insolvency in Northern Ireland is governed by separate, but broadly similar, legislation to England and Wales. Scotland has its own sequestration regime. 

This briefing paper summarises DROs as they operate in England and Wales, with emphasis on their eligibility criteria.