Debt Relief Orders (DROs) are aimed at those on a low income (less than £50 a month left
after essential expenditure such as rent and bills), with up to £15,000 of unsecured debt.
Once the order is in place, no further payments to creditors are made by the debtor and
it lasts for 12 months. If at the end of this period, the individuals financial
circumstances have not changed, then the debt is cleared.
When is a Debt Relief Restriction Order imposed?
As there are quite strict criteria in order to be eligible for a DRO, it is important that
the applicant is accurate and honest both during the application process, and also when the
DRO has been approved. If the Official Receiver believes the applicant has acted unlawfully
in their application, for example hiding documents in order to increase the likelihood of
the DRO being approved, then they can apply to the court for a Debt Relief Restriction Order
(DRRO). If the court finds in favour of the DRRO, then certain restrictions will be placed on
the individual for a period of between 2 and 15 years.
The restrictions generally will be the same as those imposed under the Debt Relief Order,
however where the DRO lasts for a period of 12 months, the DRRO could last up to 15 years, which
can have a significant impact on the individual in a number of ways:
• Future Credit. As in a DRO, the debtor cannot apply for credit of more than £500
without disclosing the DRRO to the lender. Furthermore, the DRRO will be logged on the
individual's credit file at least for the period of the order, and usually for 5 years after
the order has finished.
• Impact on work life. As with Bankruptcy, any individual in a DRRO will not be able
to act as a Company Director, nor can they have any involvement at all with the promotion of
an existing company, or the formation of a new one while the order is in place. The individual
is also unable to be the receiver or manager of a company on behalf of debenture holders.
• Business Impact. An individual in a DRRO may not enter any business transactions in a
name that is different to the one the order was enforced in without disclosing to all parties
• Future Roles. An individual in a DRRO cannot work as an Insolvency Practitioner while
the DRRO is in place. Nor can they become a member of the Houses of Parliament. It is possible
that there may be similar restrictions with other roles.
Breaking the restrictions.
If an individual in a DRO breaks any of the restrictions imposed, then it would be a criminal
offence and could face a fine or imprisonment. Where an individual has had involvement with a
company (as above) they will be held responsible for any debts accrued by the company in that