A Debt Relief Order (DRO) is often the best debt solution if you have under £30,000 of debt, you are renting and you have hardly any spare money to repay your debts. You don’t have to make any payments in a DRO and, after a year, your debts are wiped out.
See What is a DRO? which looks at the eligibility criteria and how to apply for an overview.
Here are some common questions I hear about DRO applications.
Contents
Questions about eligibility and suitability
The DRO criteria are fixed numbers, not rough guidelines, and you will have to meet them all. Your DRO Adviser checks this and won’t submit your application if you don’t.
I’m self-employed, I make little money but it’s erratic
You can have a DRO if you are self-employed. Business Debtline are good people to talk to about your situation as a variable income can make it harder to judge.
My bank account often has a lot more than £75 in it so will the Insolvency Service reject a DRO?
This isn’t a problem. Your DRO adviser will do a proper check on your income and expenditure and if they say you meet the “under £75 spare income a month” test, then you are going to be fine.
I have applied for PIP but don’t know if I will get it
Tell your DRO adviser. If your only income is from benefits, this probably won’t matter. You have probably been spending less on some things than you should and the PIP will let you cover a lot more of the costs associated with the disability.
Even if you have other income it may be OK – although your income may be going up, your advisor can include extra disability expenses.
If you get a backdated amount when your PIP application is accepted, this won’t be a problem for your DRO. Backdated “premium” amounts that are added to other benefits when you get PIP can be a problem – talk to your DRO adviser about these.
Does it matter if I went bankrupt 4 years ago?
No. The DRO Unit of the Insolvency Service will only refuse your application because of previous insolvencies if you:
- are currently an undischarged bankrupt; or
- you are currently in an IVA; or
- you have had a DRO in the last six years.
I’m staying with friends but when I get a place to rent, I will have no money
Applying for a DRO at the moment probably isn’t a good idea!
I suggest you save up the money for a deposit and move out. Then you will know what your expenses are and what your surplus income is. Also, it can be simpler to find somewhere to rent without a DRO (or bankruptcy or an IVA) on your credit record.
You may well be right that you will be broke when you have moved, but getting yourself settled in a new home is your top priority. Your debts – and any DRO – can wait.
I’m going to retire in about 6 months, what about my lump sum from my pension?
If you get a large lump sum from your pension whilst you are in the middle of your DRO year, your DRO will probably be cancelled.
Unless you can postpone taking your pension until your DRO is completed, a DRO probably isn’t a good option for you. Talk to your DRO Adviser about this and about what your other alternatives are.
My maternity leave is ending in a few months – will this be a problem?
Your income will increase, but you may also get large childcare expenses, cost of travelling to work etc and your benefits may reduce, so you may still meet the DRO criteria. You need to talk this through with your DRO Adviser.
If returning to work will be a problem for your DRO, then you may have other alternatives eg part time work for a few months until your DRO ends
Questions about income, assets and expenses
I have a car on finance – does this count as an asset?
No – you don’t own it.
But read Cars on finance and DROs which looks at some complications with cars on finance and DROs. These may not be a problem for you, but you need to discuss this with your DRO adviser.
I don’t have any bank statements – does this matter?
Your DRO Adviser will want some proof of your income – if they ask for bank statements and you don’t have any, it’s usually easy to get one. Or they may be happy to accept wage slips and any benefits letters.
The Insolvency Service doesn’t need to see your bank statements.
Are student loans treated as income when applying for a DRO?
Student maintenance loans and grants count as income for a DRO. The loan you get for tuition fees is ignored.
If you are going to uni as a mature student, a DRO may well be a sensible option for you. But if you will finish your degree and get a well-paid job within the DRO year, a DRO may not be a good idea for you – talk to your DRO Adviser about this.
(As you expect to earn more in the future, students should generally avoid an IVA where your payments would increase a lot.)
Why do I have to say what my partner earns?
A DRO won’t be refused because your partner earns a lot – they aren’t going to be told to pay your debts.
You are being asked about their income so that it can be checked that the rent and bills are being fairly divided between you. If you earn the same, a 50/50 split would be normal.
We are both going to need a DRO – how do we divide up the expenses?
Expenses are usually divided in the same ratio as your income. So if you both have about the same income, you spilt the rent, council tax, and all joint household bills 50:50. If your income is twice what your partner’s is, you would be expected to pay 2/3 of the bills and your partner 1/3.
But you don’t have to sort these numbers out, get the same debt adviser to do both DROs and they will do all this.
My parents have been giving me money to help with my debts
Those are gifts and they could stop at any time. They don’t need to be reported on your DRO application as income because they aren’t income.
Is my car worth what I can sell it for?
You can get a valuation using Parker’s Guide, This gives a range of values for your car – talk to your DRO adviser who may agree that the bottom end of the range is likely to be acceptable.
I have a car registered in my name for insurance, but it’s owned by my mother – what will happen?
Tell your DRO Adviser but this should be fine. What matters is who owns the car, not whose name is on the insurance or the V5 registration. You will probably need to provide some proof about who bought the car.
I’m unemployed and I pay my mum £30 a week for rent and board – is this allowed?
That isn’t going to be a problem – it would cost you far more to rent a room privately somewhere else!
I’ve made an affordabilty complaint – should I delay until this is sorted?
Possibly but unless the refund will be large, it may be best to get on with the DRO now. Read “If I get a refund, what will happen to a DRO?” which looks at this in detail.
Questions about debts
Why do I have to get my credit reports?
You are being asked for a credit report so that your DRO Adviser can be sure all your debts are being listed. This is for your own protection – any debts which are not listed on your DRO application are not included in it and so you will still have to pay them.
What details are needed about the debts?
Who the current creditor is, the amount and the reference number. If there are several reference numbers – the original credit card number, a debt collector account number and another number on your Experian record say – list them all to be on the safe side!
Do I have to include my broadband/mobile/car insurance contract which still has over a year to run?
These are “service contracts” – you aren’t repaying a loan, just paying for a service, eg supply of broadband, throughout the year. You don’t generally have to include service contracts unless you are behind with the payments – in that case they do have to be included.
But you need to check with the adviser setting up your DRO that the payments will be allowable as an expenditure.
With a mobile contract, it may be set up as part loan and part service contract. In this case is it usually possible to include the contract in your DRO but keep the handset and then get a PAYG sim-only contract. Talk to your debt adviser about this.
I stopped paying most debts ages ago but still pay two catalogues – is this a problem?
Technically this is called “preference” – paying some creditors and not others. That may sound alarming, but it’s pretty common. Although the DRO Unit can refuse a DRO application if this has happened, they assess how serious the preference was. Most people don’t have a problem:
- if the preference was a while ago and before you took advice about a DRO, it matters a lot less – so from this point you must treat all your debts equally. For most people this means not paying anything to any of them. BUT don’t stop paying any priority debts without talking to your DRO Advisor first!
- if you had been paying a family member or a friend and not paying commercial debts, that is seen as more serious;
- paying the normal monthly amount to a mobile contract does not count as preference.
Talk to your DRO Adviser – they may not be concerned or they may suggest putting off a DRO application for a few months so the preference is further in the past. But if you have problems with bailiffs or other urgent reasons it may still be good to apply now.
I used my credit card last month – is this a problem?
This is another common situation. It does depend on why you used credit – paying for an essential car repair is much less of an issue than taking the family to Disneyland!
A DRO application won’t be refused because of this. It it is possible but rare that some extra restrictions may be imposed if the DRO Unit thinks you have behaved recklessly.
Talk to your DRO Adviser. Some DRO Advisers don’t like putting in an application unless you haven’t used any credit for several months, but if the amount was small, or for an urgent need, you may want to carry on with it.
Once you have decided to apply for a DRO you should not use any more credit.
I have a car on HP – is this debt included
Normally all debts have tio be included in a DRO but this is one of the very few situations where you have a choice. See DROs – what if you have a car on HP? for details and talk to your DRO adviser about this as it can get complicated.
I am repaying a Universal Credit advance – can this be included?
Yes. UC Advances are debts that should be included in a DRO. When the DRO is approved, any deductions from your current benefits for these should stop.
This also applies to benefit and tax credit overpayments. But it does not apply to Social Fund loans – these cannot be included in a DRO.
I’m confused about rent arrears
Rent arrears are a debt that has to be included in your DRO. But if you are still living there, you are allowed to carry on repaying the arrears and if you don’t, the landlord or Housing Association/Council may try to evict you.
Talk to your DRO Adviser about this – it’s important you get an affordable arrangement in place to repay your rent arrears in place.
This is one case where going to your local CAB for help with a DRO is good as they may know what policies local Housing Associations have.
I have cleared rent arrears and not paid other debts
Normally you have to “treat your creditors the same”. But this doesn’t apply to any priority debts such as rent arrears, council tax arrears, energy bills etc. Paying these a lot more than debts like credit cards does not count as a “preference” and won’t stop you getting a DRO.
Questions about the application
Who can help me with this?
It doesn’t matter who you go through, the DRO you end up with will be the same. StepChange is no longer setting up DROs, so I suggest:
- Citizens Advice – they set up more DROs than any other advice agency. They can also help with benefit advice and talking to your creditors if you have urgent problems with energy bills, bailiffs etc
- if you would prefer to talk to an adviser on the phone, call National Debtline on 0808 808 4000.
When my local Citizens Advice has checked my DRO do I then apply to the Insolvency Service?
No. Only approved intermediaries can submit an application for a DRO, you can’t do this.
Your DRO Adviser gets the information to go on the application from you and your credit records. You then have to sign to authorise them to send in your application.
I’m about to pay the £90, what happens then?
You will have been sent the letter with a barcode on it to pay the fee. The fee goes to the Insolvency Service.
You then tell your DRO Adviser you have paid this and at that point they submit your application.
How long does it take to approve a DRO?
It’s quick! Your DRO Adviser will usually get an email a couple of working days after submitting the application to say it has been approved.
You are sent a letter confirming this, called the Debtor’s Notice. It is posted the same day your DRO Adviser is told, so you usually get it the day after your DRO adviser knows.
Keep this letter safe, even when your DRO has finished, because it proves what debts are included in your DRO.
The Insolvency Register is also updated, showing your DRO.
How many DROs are rejected?
Only a tiny number of DRO applications are rejected – less than one in three hundred applications.
If your adviser has agreed to put your application forward, it is because they have already made all the checks and they don’t expect any problems.
How long do creditors have to object?
Creditors don’t have to agree to your DRO, there is no set time at the start for them to approve or object.
A creditor can only object if they think you didn’t meet one of the DRO criteria. This doesn’t happen very often, and then the DRO Unit have to consider if the objection is accurate – most of them aren’t. It is VERY rare for there to be a problem with this – you don’t need to worry about it.
I am just about to pay the £90 and I have been told one of my debts has been sold
Tell your DRO Adviser – they may want to change the application. This isn’t a problem, it’s just a bit of a hassle.
I’ve paid my £90 DRO fee two days ago and I have had a letter from a bailiff about council tax
From this point, it should be very quick, so you could simply ignore this letter, but tell your DRO Adviser and make sure your application has been submitted.
If a bailiff calls, do not open the door under any circumstances, not even to explain about your DRO. See Do I have to let a bailiff in?
Other questions
Do I need a new bank account?
If you have an overdraft, it will be one of the debts in your DRO – you can’t leave it out. You will need to get a new bank account, but there is now a good range of basic bank accounts to choose from, see Getting a basic bank account.
If you don’t have an overdraft, you will usually be able to keep your current account. NatWest and Halifax sometimes make you downgrade to a basic bank account from a standard current account.
Your bank isn’t told you have started a DRO. However some banks check the Insolvency Register daily and so will know that you have had a DRO even though they have not specifically been told.
Who is told I have a DRO?
Your creditors are told, your name is included in the Insolvency Register (which lists people with bankruptcy, IVAs and DROs) and a marker will be added to your credit record.
There is a procedure to not include your address on the Insolvency Register if you have had domestic violence or similar issues – talk to your DRO Adviser if you are worried about this.
Your partner isn’t told – but it is always a good idea to tell them yourself!
Your employer isn’t told unless you owe the employer money or unless you have an attachment of earnings in place (which will stop) in which case your employer is contacted.
Your landlord is only told if you have rent arrears.
Will a DRO affect my partner’s credit record?
Only if you have a joint bank account or loan with them.
Do I have to send in monthly statements?
No! No one checks up on your income and expenditure during the DRO year. Or at the end of the year.
If this sounds unlikely, think about how low the fees are… Your £90 isn’t going to pay for anyone to be looking at your bank statements each month!
Can I move abroad?
Yes – tell the DRO Unit your new address and you will still have to inform them of changes to your income and expenses.
No such thing as a foolish question
I hope I have covered many questions here.
But tell your DRO Adviser about any concerns or questions that you have. Not just about your current situation and the application process, but about what may happen in the next year. It’s much better to have this discussion before an application goes in.
Will more pay or a windfall affect a DRO?
Do debt collectors still phone after a DRO?
DROs and your credit rating
Stuart says
i have debt, my wife has debt , all unsecured, all individual names ,all under £30,000, we own no house, she has no car, i am getting a new better decent paid job, it will allow my wife to give up her part time job, we are both on a dmp at mo. can my wife get a dro on no income, she wants to go back to being a housewife and not a job seeker, i read it is not compulsory to be a job seeker or thus forced to claim job seeker benefits if anyone makes a dro application, and my wages will cover all food, gas, rent, council tax, all living costs etc. she will put down zero expenses, and zero income on her DRO application is this ok.
Sara (Debt Camel) says
How long have you been in a DMP? Do you get any benefits now and will you after you pay increase?
Stuart says
we get no benefits now, we earn too much for any benefits, we earn around £13,000 each, i did speak to a dro advisor last year, when i said im considering dropping my hours even more, he said doing so will leave you negative £20 a month, but if i claim UC top up( the housing element,, it will put me over the £75 limit( i said i dont want to be a fulltime job seeker,( and if wife does exactly the same) but i said there is nothing to stop us not claiming UC, he agreed, there is nothing in DRO law that says you have to claim benefits.
so this is one option, or the other option is like i said take the new higher paid job for me, and my wife goes back to being a housewife and she claims a DRO on her own right.
been on a dmp for 2 years
Stuart says
we both earn about £13,000 each at the mo, but my new job will give me £32,000, which is more than our combined p/time jobs, i will need to have a car for my new job, no bus routes to new job, my wife will have to give up her job as i will take the only car, which is in my name, her current job isnt on any bus routes. so it makes sense on 2 levels, 1, she cant continue her p/time job without a car, which i will be now be using and she wants to become a housewife anyway. I assume the DRO application will want to know how much i will be earning, the only joint secured bills are council tax, rent and water. But the gas, tv licence , home broadband and electricity are solely in my name.
how exactly do we fill the DRO application in so it passes, her debts are around £12,000, so it isnt really worth her going to work anyway, cos if she has a year off as a housewife on a dro, it would almost equal her wages anyway. If she gets a DRO, she said she will consider going back to work in a years time , once the DRO is over and her debts are written off.
Sara (Debt Camel) says
You don’t fill in the DRO application the DRO adviser does.
One job at 32k will give you about the same take home pay as two part time jobs at 13k.
She will not be rejected for a DRO because she could get a job. Nor if she isn’t claiming all the benefits she could. But I can’t tell whether what you proposing is sensible – I think you should talk to your local Citizens Advice about your options and this new job. You also have to look at what your debt options are.
Deppi says
Not sure you are fully informed about UC and how your joint income affects the UC claim. I would suggest you ask some advice (for income, joint claim and how much UC you will get) at forum.scope.org.uk
Again, this is not about DRO, but I think with the income you have (as joint claim you and partner) you UC will be null. Please ask some advise at scope.
stu says
basically have two choices if we want to speed up our DMP and clear debts faster.one is I get new well paid job .I pay my own debts off fast..wife
gives up her job. becomes housewife and gets a dro.her dents written off after a year.
or we both drop hours to patime.we both do dros each.or we both do bankruptcy each. no IPA would be with bankruptcy cos part time wages too low..
stu says
did a hypothetical dro with a cab advisor. based on me and wife reducing hours.he said he would refuse it as he said we would still be short on money to live on without claiming UC and becoming full-time job seekers.i said and he agreed making a UC claim is not a legal requirement when making a dro request.we said we aren’t going back to full-time work. hence no UC claim . but he said we are negative £25 a week each if we drop our hours at work and don’t claim UC as job seekers. and hence he would not allow the dro application. I said I will save up money before the dro and live off it for 12 months. as long as it’s under £2000 in savings.plus my car is worth £800
Sara (Debt Camel) says
So go back to CAB and get them to look at your new job option. It sounds as though you may earn too much for benefits. And if your wife can’t get to work…
stu says
yes if I get new job and wife does dro possibly.but if I don’t want new job I can’t get or neither can wife get dto if we reduce our hours in our current jobs as we would be fractionally too poor according to cab guy .he said we would be in deficit of what we need to survive on. he said he wouldn’t do dro for us .he suggested getting UC on top of wages.but that would hold us in the job seeker agreement of getting or looking for full-time work.which we won’t want as it would end dro.and as I said we would get sanctioned for reducing our hours
so is it my right to tell the cab dro guy to go ahead with dro application.even if he says we won’t really have enough money to live off on ptime wages.but we can’t get dro on our current full-time hours.
Sara (Debt Camel) says
£25 a week short is not “fractionally” too poor. An adviser will be very reluctant to propose a DRO that will fail either because you have to apply for benefits and are then over the limit or because you end up borrowing money or you end up unable to pay priority debts.
I am sorry but you need to work through your options with an adviser, not me.
Keely says
Hi Sarah,
I am hoping you can point me in the right direction.
So i have 15k in debt over credit cards and catalogues. 8k of it is with newday and has caused the biggest problems for me.
I got intouch with SC for help & they said i didnt qualify for DRO & pushed forward with an IVA.
I have had no end of issues trying to sort out the IVA and it hasnt been submitted yet (i dont think) its been really stressing me out. Everytime they ask for something and i provide it something else then comes up. Been dragging on for weeks now.
But i am confused inregards to the DRO not being applicable for me.
I am on benefits due to disabilities. I have no assets other than my car. Its 2014 fiat and is around 3k. i had to get a car specifically that big due to my disabilities & having 2 children.
I cant walk anywhere i have to drive. Its automatic as i cannot drive a manual due to my conditions. It has to be high as i cant climb out of low cars, requires a big boot, I have to have a camping toilet in the boot at all times. Plus a pram. Wheelchair when i am at my worst. The car is far from good nick its scratches and dints and a wing mirror is literally screwed on so it cant move. But its essential for my use. Without it i would never be able to leave the house as cannot use public transport.
Sara (Debt Camel) says
All your income is from benefits?
How much do StepChange say you would have to pay in an IVA?
Keely says
They are saying i have £98 left which is not true by the end of the month im in overdraft or using credit cards for food.
I get UC, LCWRA, Child benefit and PIP.
All is classed as income. I didnt think my PIP would be included 😔 i need to buy a new walking stick but cant afford as the money goes on paying debts?
I explained all this but SC stated that its irrelevant? Is that righ? I have looked over docs etc online and there seems to be not set wording in regards to what type of car and its use can be excluded?
Sara (Debt Camel) says
Are you making payments to your debts at the moment?
How large are your debts and are they all consumer debts (credit cards, catalogues, overdrafts, loans) or are there a arrears on bills as well?
Have Stepchange said the problem is your car? or that you have “too much” spare income?
Keely says
I am behind on my aqua and vanquis. But i have on the others. I spent 1k of my 5yr old money to try and keep up on minimum payments. Thats when i knew i couldn’t do it any longer.
2 catalogs
5 credit cards
Newday being 8k of the 15k
I had to take out a credit card with 1 year zero on balance transfer to pay off 2.500 of my aqua to get ontop of it, but it never got better and i now owe both for the same debt because it lowered my minimum payment by about £20
I have never had issues before.
Stepchange said i didnt qualify for DRO because of my car.
Sara (Debt Camel) says
The car valuation – how did you get this?
An IVA is a ridiculous idea in this situation. You should not walk into a 5 year agreement to make monthly payments.
But a car can only be left out of a DRO if it is over 2k if it has been specifically adapted for your disability.
Is there any relative that could “buy” half of the car from you for £1500 so you only own half of it?
Another option is for you to offer £1 a month token payments to all of your debts and wait for the car value to drop below 2k. You can explain to the lenders that you would qualify for a DRO is it wasnt for the car, but you cannot manage without it because of your disability and family. https://debtcamel.co.uk/token-payment-debt/.
Keely says
The car valuation is from parkers as per the insolvency service website. I paid for a proper one because its in poor condition so the free valuation wouldn’t be correct.
I cant find clarification on what “adapted to you” means exactly. If they were to sell it and give me 1k for a replacement car i wouldnt be able to get one that would be suitable and meet the criteria i need.
Can i pull out of the IVR if it hasnt been sent to the creditors yet?
I dont have family who can buy half of it sadly. I paid off the HP 2 years ago and me and my husband are insured to use it. He is my carer and doesnt work he only gets carers. He is waiting for his practical test next year so he can do the driving due to my conditions being worse.
Sara (Debt Camel) says
So far as I know “adapted” means a change has been made to the car eg to accelerator, gear stick, loading, entering the car etc. Not that you have bought a car that is suitable.
Yes you can pull out of the IVA before it has been voted on. If StepChange say the only reason not to have a DRO is the car, then it’s likely you would Struggle to afford the IVA payments consistently for 5 years.
One alternative is a token payment plan for your debts. After a year review – the car may have fallen to be less than 2k. Or at that point you could consider asking the creditors to write off your debt – it’s too soon for this now, paying £1 a month for a year will make them more realistic about this.
Another option is to change to a motability car, which would be paid for from part of your PIP. Is that possible? If it was, you could sell the car, buy any things you really need and when the cash left is under 2k go for a DRO. If you want to do this it’s a good idea to start paying the creditors all £1 a month now so you re treating them all equally.
Keely says
I want to say thank you for your advice! I challenged them on the DRO and i told them to push it through regardless of their opinion, as the official receiver should review on a case by case basis. They asked me to get a quote for my car at a garage. As they had it up at 4.5k was actually worth 1.2k. My DRO was approved.
I am annoyed i had to fight it as hard as i did. The service i used for the DRO had me in tears arguing with me about submitting it. They had to get approval from senior management apparently. Yet it was approved after a simple quote from a garage re the car price.
John Connor says
Are debts from care home top-up fees covered by a DRO?
Sara (Debt Camel) says
is it the person in the care home that is eligible for the DRO? or have you signed a contract to be liable for someone else’s fees?
Maria says
Hi I defaulted on two accounts on 02/21 and 03/21 they were sold to Lowell who will now be issuing me a ccj. For the defaults to come off my credit file do I wait 6 years from 2021 or 6 years from 2023?
Sara (Debt Camel) says
Are you applying for a DRO? Asking because this page is about DROs…
Has Lowell started court action yet? Have you had court papers? or a Letter Before Action/Claim? or are they just threatening this?
Maria says
I have 7k debt it’s just this debt I’m unable to pay off. I’m not sure if it’s worth considering applying for dro so I’m contemplating. I’ve had court papers come through the door. A letter before action claim is what I’ve been delivered
Sara (Debt Camel) says
I think you should talk to your local Citizens Advice about a DRO which will be able to include these Lowell debts. Or National Debtline on 0808 808 4000 if you prefer to do this by phone.
If there is a CCJ, that will stay on your credit record for 6 years from the judgment date, even after the debts themselves have dropped off your credit record 6 years after the default date on the credit record.
This article https://debtcamel.co.uk/letter-before-claim-ccj/ looks at how to respond to the Letter Before Claim pack you have been sent. You can tick box C if you are planning to talk to a debt adviser about a DRO and also ask for more information by completing Box I. National Debtline can explain more about this if you talk to them.