Debt Repayment Order: A lifeline for people struggling with unsecured debt

15 August, 2025 | Nathan Tetzlaff

If you are an individual with a relatively modest levels of debt (under $50,000) and want to avoid being declared bankrupt, you can use a Debt Repayment Order (DRO) to manage your debt in a structured and affordable way.

What is a DRO?

It is a formal repayment plan for managing certain types of debt.

It is designed to support both individuals who are struggling to repay their debts as well as creditors seeking to recover what they’re owed.

Who is it for?

This tool is designed for individuals with up to $50,000 in unsecured debt that they can’t pay when due. However, it doesn’t include debts from child support, student loans, court fines, penalties, or reparation orders.

It could be especially helpful to you if you are juggling multiple debts with different due dates.

How does the DRO process work?

It is administered by the Official Assignee and is part of the broader insolvency system. If you apply, you will sign up with a DRO Supervisor who will work with you and your creditors.
Each payment you make will be shared among your creditors, so you won’t have to make tough choices about who to pay first. A typical plan will run for up to 3 years, but if justified by special circumstances, can run for up to 5 years.

Under a Debt Repayment Order you are protected from enforcement action by your creditors included in the DRO, providing some certainty and stability. Your debt would be easier to manage by having a single sum, giving you better visibility of what you owe. The sum can also be broken down into instalments that you are able to afford.

Any new debts won’t be included in the DRO, and you must keep making your scheduled payments.

This tool can help you avoid the stigma of bankruptcy; however, your name will be listed in the DRO Register on insolvency.govt.nz for the duration of the order.

Conclusion

If you’re feeling overwhelmed by debt but want to avoid the long-term consequences of bankruptcy, a Debt Repayment Order could offer a practical and manageable solution. It can help you regain control of your finances.

(Article by Senior Associate, Nathan Tetzlaff, and Law Clerk, Karolina Lepiesza)

If you are considering applying for a DRO we can help make sure this is the right option in your particular circumstances.

To become a client, fill out the form below in the first instance, or call Nathan Tetzlaff on 09 8376844 or email nathan.tetzlaff@smithpartners.co.nz