Debt Relief Order Costs: Is a DRO Free?

• £0DRO application fee
• £90Fee before 6 April 2024
• £0Advice from an approved intermediary
• £680Bankruptcy fee, by comparison

The application fee: £0 since April 2024

When DROs were introduced in 2009, applicants had to pay a £90 fee to the Insolvency Service before the order could be made. For people with less than £75 a month spare, that was a real barrier. Advice charities reported clients saving up for months, or giving up altogether. The fee was abolished on 6 April 2024. There is now no charge at any stage.

When the fee was removed, the Insolvency Service ran a refund scheme for people who had paid it shortly beforehand. It only applies if you paid a DRO fee in early 2024. Your adviser or the Insolvency Service can confirm whether anything is still owed to you.

Advice and the application are free

Only an approved intermediary can submit a DRO application. These advisers work for free advice organisations funded by government, the financial services levy and charitable income. There is no charge for the assessment, for preparing the application or for submitting it. The same adviser will also check whether another solution suits you better, again at no cost. Our guide to finding free debt advice lists the main providers and explains how to reach them.

Fee-charging firms and lead generators

Lead generators are common in search results. They often use official-sounding names and wording that hints at a government connection. There is a simple test. An approved intermediary never asks for payment, never guarantees an outcome, and always discusses the alternatives. If any of those are missing, you are not dealing with one. Be just as wary of anyone who wants an upfront payment to "check" your eligibility. You can do that for free with our eligibility checker or by calling a free adviser.

How DRO costs compare with other solutions

Cost is only one factor. Bankruptcy has no debt limit and is open to homeowners. An IVA lets you keep assets and repay part of what you owe. The comparisons at DRO vs bankruptcy and DRO vs IVA weigh up the full picture.

The indirect costs of a DRO

Nothing is paid to anyone, but a DRO still has financial consequences. None of them is a reason not to apply if a DRO is the right solution. It is simply better to know about them in advance.

Credit for six years

The DRO stays on your credit file for six years from the approval date. During that time most mainstream lenders will turn you down, and those that do lend will usually charge more. This affects credit cards, loans, car finance, mobile phone contracts and some tenancy applications. For many people it is the biggest long-term cost. See how a DRO affects your credit score.

Bank account changes

If you owe money to your bank, it may freeze or close your account when the DRO is made. Opening a basic bank account elsewhere is free, but it will not come with an overdraft. You may also need to move direct debits and tell your employer or the DWP about the change. Our bank accounts guide explains what to do and when.

Deposits and upfront payments

Some energy suppliers, landlords and letting agents run credit checks. Where they see an insolvency record they may ask for a larger deposit, a guarantor or a prepayment meter. This is their choice and far from universal, but it is worth budgeting for if you expect to move or switch supplier during the six years.

Insurance

Some insurers ask about insolvency on application forms. A DRO may affect the premium quoted, or which insurers will cover you for your car, home contents or other needs. You must answer these questions honestly, because failing to disclose can invalidate a policy. Shopping around is usually the best response.

Restrictions on business activity

During the DRO you cannot act as a company director, or form, manage or promote a company, without the court's permission. If your livelihood depends on running a limited company, that is a real cost. Sole traders are not affected in the same way. See the restrictions page and DRO and employment.

Is a free DRO still the right choice?

Having no fee removes a barrier. It does not change the question of whether a DRO suits you. The advantages and disadvantages page sets out the trade-offs, and an approved debt adviser will go through them with you, free of charge, before anything is submitted.