House of Commons Library

Debt Relief Orders

Published Tuesday, November 13, 2018

Debt Relief Orders (DROs) were introduced under the Tribunals, Courts and Enforcement Act 2007 (TCEA 2007) and came into force on 6 April 2009.This briefing paper outlines the background to the introduction of Debt Relief Orders and the main features of the new orders with particular emphasis on the eligibility criteria.

Jump to full report >>

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

A person in financial difficulty can apply for a DRO if they cannot afford to pay off their debts. A DRO is a cheaper option than going bankrupt. To apply for a DRO, the applicant must satisfy a strict eligibility criteria. DRO lasts for 12 months, during which time creditors cannot take debt recovery action without court permission. At the end of the year, the debtor will be free of all the debts listed in the order provided his/her circumstances have not changed.

The aim of DROs is to provide:

  • a low-cost debt remedy aimed at the financially excluded who have relatively low liabilities, little surplus income and few assets;
  • a workable debt relief remedy for those who cannot take advantage of other debt remedies such as county court administration orders and Individual Voluntary Arrangements (IVAs) and where bankruptcy would be disproportionate; and
  • a fresh start for vulnerable people trapped in debt

This briefing paper outlines the background to the introduction of DROs and the main features of the new orders with particular emphasis on the eligibility criteria.

 

 

 

Commons Briefing papers SN04982

Author: Lorraine Conway

Topic: Insolvency

Share this page

Stay up to date

  • Subscribe to RSS feed Subscribe to Email alerts Commons Briefing papers

House of Commons Library

The House of Commons Library provides research, analysis and information services for MPs and their staff.