Debts Not Included in a Debt Relief Order

Which debts are excluded from a DRO?

The following debts cannot be included in a Debt Relief Order. They are still listed on the application so that the Official Receiver has a complete picture, but they sit outside the order and do not count towards the £50,000 limit.

• Child maintenance arrears and Child Support Agency debts
• Sums ordered in family proceedings, such as lump-sum or costs orders
• Magistrates' court fines and other criminal fines
• Criminal confiscation orders
• Student loans, both older mortgage-style and income-contingent loans
• Social Fund budgeting loans and crisis loans
• Debts secured against your property or goods, including logbook loans
• Hire purchase and conditional sale agreements while you keep the goods
• Damages for personal injury or death awarded against you by a court
• An unpaid TV licence

See also our page on debts that can be included in a DRO.

Court fines, child maintenance and family debts

These debts survive every insolvency procedure because maintenance exists to support a child and fines exist to punish an offence. Writing either off through a debt solution would defeat the purpose.

In practice you must keep paying ongoing child maintenance in full. Any arrears need an arrangement with the Child Maintenance Service or the other parent. Court fines should be paid on time, or you should ask the court's fines office for a payment plan. Enforcement of fines can be fast and can include bailiffs or benefit deductions.

Your adviser will treat these as priority outgoings in your budget. That reduces the spare income left over and can help you meet the £75 test. The income and asset limits page explains how the budget is built.

Student loans and Social Fund loans

Student loans are excluded from DROs, bankruptcy and IVAs alike. Repayments on income-contingent loans are collected through PAYE or self-assessment once your earnings pass the relevant threshold. For many people on a DRO-level income nothing is being deducted. The debt remains, though, and will be collected if your income rises later.

Social Fund budgeting loans and the older crisis loans are repaid by deductions from benefits, and those deductions continue during the DRO. If they leave you struggling, you can ask the Department for Work and Pensions to review the rate. The loan itself cannot be written off through the order.

Secured debts, logbook loans and hire purchase

A secured debt is one where the lender has a legal right over something you own. Examples are a mortgage over a house or a logbook loan over a car. Hire purchase and conditional sale work the same way, because the finance company keeps ownership until the last payment. The DRO does not remove the lender's security, so it cannot write the debt off while you keep the asset.

Logbook loans and car finance are the common cases. You can keep the goods and keep paying, in which case the payments go into your budget and your adviser decides whether they are a reasonable expense. Or you can return the goods. Once the lender has sold them, any shortfall becomes an unsecured debt and can go into the DRO. Our guide to DROs and vehicles looks at this decision in detail.

Debts arising from fraud

A debt incurred through fraud, such as a loan taken out using false information or a benefit overpayment caused by a deliberate false statement, is in a special position. It is listed in the DRO, counts towards the £50,000 limit, and the creditor is bound by the moratorium during the 12 months. It is not discharged at the end, so once the order ends the creditor can pursue it again.

Whether a debt is fraudulent is a question of fact. A creditor who believes it is may say so when told about the DRO. If you are worried that a creditor might take this view, raise it with your adviser before applying.

Bills that start after the order is made

A DRO draws a line on the date it is approved. Anything you owed on that day can be included if it qualifies. Anything that becomes due afterwards is a new liability and is yours to pay in the ordinary way. That means rent for each month after approval, council tax billed after the order, gas, electricity, water and phone usage after approval, and any new borrowing.

Falling behind on these can lead to new enforcement action. With rent, it can put your tenancy at risk, because the DRO freezes old arrears but does not stop a landlord acting on arrears that build up afterwards. See what happens during a DRO for a month-by-month picture.

Are other people still liable for joint debts?

Yes. A DRO protects you alone. If a debt is joint, your co-borrower remains liable for the whole of it, and the creditor is free to pursue them. If a friend or relative guaranteed a loan for you, the lender can ask the guarantor to pay once your DRO is approved. A debt that belongs to your partner and not to you cannot be included in your order, even if you have been helping with the payments.

Talk to anyone who shares a debt with you before you apply, so they can seek their own advice. They may qualify for their own DRO or another solution. The comparison of debt solutions is a good starting point.

Included, excluded and still payable at a glance