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Debt Relief Order Glossary

Insolvency has its own vocabulary, and much of it appears in letters from creditors, the Insolvency Service and your adviser. This glossary explains the terms you are most likely to meet while looking into a DRO, with links to the pages that cover each one in depth.

About 8 minutes to read Figures checked against GOV.UK guidance updated 28 June 2024
Administration Order
A county court arrangement for people with debts under £5,000 and at least one County Court Judgment, where the court sets a single monthly payment shared between creditors. It is one of the alternatives covered in our comparison of debt solutions.
Approved Intermediary / Approved Debt Adviser
A debt adviser authorised by the Insolvency Service to assess people for a DRO and submit the application. Most work for free advice organisations such as Citizens Advice, StepChange or National Debtline, and you cannot apply without one; read how to apply for a DRO.
Arrears
Money overdue on a regular commitment such as rent, council tax, energy bills or a loan. Arrears built up before a DRO is approved can usually be included, but payments due afterwards must be kept up; see which debts qualify.
Asset
Anything you own that has value, including savings, investments, shares, jewellery, vehicles and property. For a DRO your assets must be worth less than £2,000 in total, though everyday household items and tools needed for work are normally disregarded; the income and asset limits page explains what counts.
Bailiff / Enforcement Agent
A person authorised to recover a debt by visiting your home and, in some cases, taking goods; "enforcement agent" is the legal term in England and Wales. Creditors listed in a DRO cannot use them for those debts without court permission; see what happens during a DRO.
Bankruptcy
A formal insolvency process with no upper debt limit, applied for online with a £680 fee. Assets of value, including a home, can be sold, and discharge usually comes after 12 months; compare the two on our DRO vs bankruptcy page.
Breathing Space (Debt Respite Scheme)
A government scheme in England and Wales giving 60 days of protection from creditor contact, enforcement and most interest and charges while you get debt advice. A mental health crisis version lasts for your treatment plus 30 days, and although it is not a debt solution itself, it can give you time to have a DRO assessed.
CCJ (County Court Judgment)
A court order confirming that you owe a debt, usually made after a creditor sues you and you do not pay or defend the claim. It stays on your credit file for six years, and debts covered by a CCJ can still be qualifying debts in a DRO.
Creditor
A person or organisation you owe money to, such as a bank, card provider, utility company, landlord, council or a friend who lent you money. All creditors of qualifying debts must be listed in a DRO application and are told if the order is made.
Credit Reference Agency
A company that collects information about how people manage credit and sells it to lenders as credit reports. The main UK agencies record a DRO for six years from approval; see how a DRO affects your credit score.
Credit File / Credit Report
The record a credit reference agency holds about you, covering credit accounts, payment history, defaults, CCJs and any insolvency. A DRO shows for six years from approval, and the debts included are usually marked as defaulted and later satisfied.
Debt Management Plan
An informal agreement to repay your debts at an affordable monthly amount, arranged free by charities such as StepChange or PayPlan or by fee-charging firms. Creditors are not legally bound, interest is not guaranteed to be frozen and nothing is written off; see DRO vs Debt Management Plan.
Debt Relief Order
A formal insolvency solution for qualifying individuals in England and Wales with qualifying debts under £50,000, spare income under £75 a month, assets under £2,000 and no interest in property. Included debts are frozen for 12 months and then written off if the order is not revoked; start with our complete guide to Debt Relief Orders.
Debt Relief Restrictions Order (DRRO)
A court order, applied for by the Official Receiver, that extends DRO restrictions for between 2 and 15 years. It is used where someone has behaved dishonestly or recklessly, for example by hiding assets; see the DRO restrictions guide.
Debt Relief Restrictions Undertaking (DRRU)
A voluntary agreement to accept the same extended restrictions as a DRRO, for the same 2 to 15 year range, without the Official Receiver going to court. It is recorded on the Individual Insolvency Register.
Default
A marker on your credit file recording that a credit agreement has broken down because you did not keep to its terms, which stays for six years from its own date. Debts included in a DRO are normally defaulted by the creditor if they were not already; see DRO and your credit score.
Discharge
The point at which the debts included in a DRO are written off and the restrictions end, normally 12 months after approval provided the order has not been revoked. Read what happens after 12 months.
Disposable Income / Spare Income
The money left each month after reasonable household expenses, which must be under £75 for a DRO. Advisers calculate it using the Standard Financial Statement; see how spare income is calculated.
Excluded Debt
A debt that a DRO cannot write off and that does not count towards the £50,000 limit, although it must still be listed and paid. Examples include child maintenance, court fines, student loans, Social Fund loans, secured debts and fraud debts; see debts not included.
Hire Purchase
A finance agreement, common for cars and furniture, where you pay in instalments but do not own the goods until the final payment. While you keep the goods the debt is treated as secured and is not written off; if they are returned, any shortfall can be included. See DRO and vehicles.
Individual Insolvency Register
The public register, run by the Insolvency Service, of people in England and Wales who are bankrupt, in an IVA or subject to a DRO, DRRO or DRRU. A DRO entry stays on it from approval until three months after the order ends.
Individual Voluntary Arrangement
A legally binding agreement to repay part of what you owe, typically over five to six years, supervised by a licensed insolvency practitioner. It needs approval from creditors holding at least 75 per cent of the voting debt by value, and fees are taken from your payments; see DRO vs IVA.
Insolvency
Being unable to pay your debts as they fall due, or owing more than your assets are worth. Formal insolvency solutions for individuals in England and Wales include DROs, bankruptcy and IVAs; see how the options compare.
Insolvency Practitioner
A licensed professional, usually an accountant or solicitor, who supervises IVAs or acts as trustee in bankruptcy. Insolvency practitioners are not involved in DROs, which the Official Receiver administers.
Insolvency Service
The government agency, part of the Department for Business and Trade, that administers DROs and bankruptcies in England and Wales, investigates misconduct and maintains the Individual Insolvency Register. Approved intermediaries submit DRO applications to it.
Interim Order
A temporary court order that stops creditors taking action while an IVA proposal is put to them. You cannot apply for a DRO while one is in force; see the DRO requirements.
Joint Debt
A debt for which two or more people are each liable for the full amount, such as a joint loan or overdraft. It can be included in your DRO, but the order protects only you and the other person remains responsible for the whole balance.
Minimal Asset Process (Scotland)
Scotland's low-cost form of bankruptcy for people with low income and minimal assets, broadly comparable to a DRO and administered by the Accountant in Bankruptcy. People living in Scotland cannot use the England and Wales DRO scheme.
Moratorium
The period, normally 12 months, during which included debts are frozen. You make no payments, interest and charges stop, and listed creditors cannot take action without court permission; "DRO period" means the same. See how a DRO works.
Official Receiver
An officer of the Insolvency Service who decides whether to make a DRO, administers it and can revoke it. You must tell the Official Receiver if your finances improve during the order.
Preference / Preferential Payment
Paying or giving something to one creditor ahead of the others, for example repaying a family member in full while other debts go unpaid. The adviser reviews the two years before application, and a preference can lead to refusal or revocation; see DRO eligibility.
Priority Debt
A debt where not paying has especially serious consequences, such as rent, mortgage, council tax, energy bills, court fines and child maintenance. Rent and council tax arrears can go in a DRO while fines and maintenance are excluded, and ongoing priority payments must always be kept up.
Qualifying Debt
A debt that can be included in a DRO and counts towards the £50,000 limit. Most unsecured debts qualify, including credit cards, loans, overdrafts, catalogues, utility, rent and council tax arrears, tax debts, benefit overpayments and money owed to friends or family; see qualifying debts explained.
Revocation
The cancellation of a DRO by the Official Receiver before the 12 months end, usually because you no longer qualify, gave inaccurate information or failed to co-operate. The included debts then become payable again; read what happens if your circumstances change.
Secured Debt
A debt tied to an asset the lender can take if you do not pay, such as a mortgage, a logbook loan or hire purchase while you keep the goods. Secured debts are excluded from a DRO and must still be paid; see debts not included in a DRO.
Standard Financial Statement
A single budgeting format used by debt advisers and most creditors across the UK to record income and spending, with guideline figures for everyday costs. Approved intermediaries use it to calculate your spare income for the £75 a month test.
Statute-barred Debt
A debt too old for the creditor to enforce through the courts, generally because six years have passed in England and Wales without payment, written acknowledgement or court action. The debt still exists, so discuss it with your adviser.
The Gazette
The official public record in which bankruptcies and certain other insolvency notices are published. DROs are not advertised in The Gazette but recorded on the Individual Insolvency Register instead, one of the differences covered in DRO vs bankruptcy.
Transaction at Undervalue
Selling or giving away an asset for much less than it is worth, such as transferring a car to a relative for a token sum. The adviser looks at the two years before application, and an undervalue transaction can cause a DRO to be refused or revoked.
Unsecured Debt
A debt not tied to a specific asset, such as a credit card, personal loan, overdraft, catalogue account or utility bill. Unsecured debts make up most qualifying debts in a DRO; see which debts qualify.

A note on these definitions

These explanations are written for general understanding and simplify some legal detail. Debt Relief Order is an independent educational website, not the Insolvency Service, and only an approved debt adviser can assess whether a DRO is right for you.

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