Living on a debt solution

What are the Debt Relief Order (DRO) restrictions?

Posted 17 July 2016

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When you’re on a DRO, what rules will you need to follow?

If you’re dealing with problem debt on a Debt Relief Order (DRO), it means you’re working towards becoming debt free on a formal solution. DROs are only for those who really can’t afford to put anything towards their unsecured debts so not many people will qualify for one.

But what is life like on a DRO? How will it affect the other areas of your life? We’ll take you through the rules when you’re on a DRO so you know what to expect – and the restrictions orders you can get if you don’t follow them.

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Who can enter into a DRO?

First off, let’s take a look at how you can qualify for a Debt Relief Order (DRO). You’ll need to have a low disposable income – this is just the amount you have left after you’ve paid all of your essential bills. To qualify for a DRO, this must be less than £50 a month. You’ll also need to owe less than £20,000 – if you owe more than this, you can’t get a DRO.

You’ll also need to have relatively few belongings, called your ‘assets’. All of your assets must be worth less than £1,000 combined. You can have a car separately and this can be worth up to £1,000. You can’t be a homeowner to enter into a DRO.

As you can see, the rules are quite strict, but this is because DROs are only available to people who need debt relief the most. If you do qualify for a DRO, you could be debt free in 12 months – provided you stick to the terms of your agreement and if your finances don’t improve in this time. If you want to find out more about the debt solution, you can read all about it on our Debt Relief Order page.

Following the rules

While your Debt Relief Order (DRO) is ongoing, there are some things you can’t do – these are the rules.

• You won’t be able to take out more than £500 in credit without telling the lender that you’re on a DRO. However, it’s unlikely that you’d want to be taking on more credit when you’re trying to get debt free.

• If you’re opening a bank account or applying for an overdraft with your existing account, you’ll have to tell your provider about your DRO.

• You can’t manage a company under a different name than the one on your DRO, unless you tell the people you do business with about your debt solution.

• You can’t be a company director unless you get permission from the court.

What can happen?

The Debt Relief Order (DRO) rules will last for 12 months. However, they can last longer if you don’t comply with the rules or you’re dishonest about how much you owe.

If you don’t stick to your DRO rules, you could even receive a fine or a prison sentence. This is because the DRO restrictions are a law, they’re not just guidelines – that’s why it’s really important to follow them.

Don’t worry – it’s highly unlikely that you’ll break any of these rules. When you take out a DRO, your debt advisor would fully explain the restrictions and make you aware of the consequences of breaking them. You wouldn’t break them by accident – it would only happen if you were deliberately not complying with the rules.

Debt relief restrictions orders

If your lenders think that you’ve been dishonst while applying for your Debt Relief Order (DRO) or while you’ve been on the debt solution, they could take out a Debt Relief Restrictions Order (DRRO) against you. You could get this if you committed fraud, didn’t tell the official receiver about some assets you had or if you paid off some of your lenders over others.

With a DRRO, the DRO restrictions could last much longer than 12 months, from two years to up to 15 years in some cases. That’s not to say your DRO will last for up to 15 years – it should still end after 12 months as normal. But the DRO restrictions we talked about above – credit limits, bank account rules and directing a company – will still stand.

Getting advice

While a Debt Relief Order (DRO) can be a way to get debt free, it certainly comes with some things to think about. As well as the above restrictions, a DRO will have a negative effect on your credit history for six years. This is because lenders will see that you didn’t stick to your original credit agreements so they might be more likely to turn you down if you apply for borrowing. And even if they do accept you, it might be at a higher interest rate.

But a Money Advisor would only recommend a DRO for you if they think the positives outweigh the negatives. If you’re not sure how to go about getting debt free, you can get free and impartial information from the Money Advice Service. You can also speak to our debt advisors using any of the options on the left. And remember – ignoring your debts will only make matters worse. By seeking help, you can get started on the road to financial security.


by Emily Bancroft

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