Debt Relief Orders and Employment: Can You Work With a DRO?

Can you work while you have a DRO?

You can stay in your job, change jobs, take on more hours or become self-employed during the 12 months. A DRO is designed for people who cannot repay their debts, and many of them are in low-paid or part-time work.

The adviser who assesses you builds a budget using the Standard Financial Statement approach: your income from all sources, less reasonable living costs. If the result is under £75 a month, you pass the income test whatever the size of your wage. Someone on a modest full-time salary with high rent and children may qualify, while someone with a smaller wage but low outgoings may not. The income and asset limits page shows how the sums work.

Once the order is approved, your wages are not touched. There is no income payments arrangement as there can be in bankruptcy.

What a new job or pay rise means for your DRO

You are free to take a new job, accept a promotion or increase your hours. What you must do is tell the Official Receiver, because any rise in income is a change in circumstances. The Official Receiver then looks at whether your spare income is now £75 a month or more. If it is, and the increase is likely to last, the DRO can be revoked and the included debts come back.

This can feel like a penalty for doing well. The logic is that a DRO is for people who genuinely cannot pay. A small rise that still leaves you under the limit, or a one-off spike from overtime, does not usually lead to revocation. Report it and talk to your adviser. See what happens if your circumstances change for worked examples.

Zero-hours contracts and irregular pay

Irregular earnings do not rule out a DRO, but they make the income test harder to apply. Advisers usually average your income over three months or more. During the order, a single good month is not normally a lasting change, but a pattern that leaves you with £75 or more spare each month could be. Keep simple records of your hours and pay.

Self-employment and sole traders

Sole traders can get a DRO and can keep trading during it. Business debts, including money owed to suppliers, HMRC for income tax, National Insurance or VAT, and business overdrafts in your own name, can be qualifying debts. Tools and equipment you need for your work are normally disregarded when your assets are valued.

The one specific rule is that you must not trade under a name different from the one on your DRO unless you tell everyone you deal with about the order. Trading in your own name keeps things simple. Business income counts towards the £75 test, so if trade picks up, that is a change to report. Business Debtline gives free advice to self-employed people.

Company directors

While a DRO is in force you cannot act as a company director, or help form, promote or manage a company, unless a court gives you permission. This is one of the DRO restrictions and breaking it is a criminal offence. If you run your business through a limited company, you would need to resign before the order is approved. That may make a DRO the wrong solution for you.

The rule covers what you do, not just your title. Making the decisions a director makes while someone else is named on the paperwork is still managing the company. Being an employee of a limited company, including one owned by a family member, is fine.

Will your employer find out?

The Insolvency Service does not contact your employer. A DRO is, however, recorded on the public Individual Insolvency Register for the 12 months of the order plus three months, and on your credit file for six years. An employer who searches could find it, but most do not look, and routine checks for ordinary jobs do not involve a credit search.

Some contracts of employment, particularly in finance, law, accountancy and senior roles, require you to tell your employer if you become insolvent. A DRO counts as a form of insolvency, so if your contract says this, you need to comply. Read your contract and staff handbook before applying, and ask your union or adviser if you are unsure.

Jobs with their own rules on insolvency

Certain roles have rules about insolvency that come from a regulator or professional body rather than from the DRO itself. Examples include some positions in financial services, some legal and accountancy roles, and some public offices. A role may require disclosure, may need the regulator's approval to continue, or may have no formal rule at all.

We do not list professions as barred, because the position depends on the individual body and can change. Check your contract, your professional body's rules and any regulator's guidance before applying, and tell your adviser about any professional registration you hold. If you serve in the armed forces or the police, check your employer's own policy. Being open early is normally better than being found out later.

Does a DRO show on a DBS check?

No. A Disclosure and Barring Service (DBS) check looks at criminal records and, for higher levels, barred lists and police information. A Debt Relief Order is a civil matter, not a criminal record, and does not appear on a DBS certificate at any level.

Breaking the DRO restrictions could lead to a prosecution, and a conviction would then be a criminal record.

Benefits and Universal Credit

Benefits are income for the DRO budget, in the same way as wages. Receiving Universal Credit, Employment and Support Allowance, Personal Independence Payment or any other benefit does not prevent a DRO. If a benefit award changes or is backdated as a lump sum, tell the Official Receiver.

Benefit overpayments can be included in a DRO as qualifying debts. Once the order is approved, deductions from your ongoing benefits to recover an included overpayment, or to pay an included debt through third-party deductions, should stop. Tell the Department for Work and Pensions about the DRO yourself, with the approval date, so that deductions stop promptly. Social Fund budgeting loans and crisis loans are excluded debts, so deductions for those continue.