Debt Relief Orders Explained: What a DRO Means (UK 2026)
DROs were made completely free in June 2024 and are designed for people with debts under £30,000, minimal assets, and less than £75 surplus income per month. Here's what a Debt Relief Order actually does to your debts, who qualifies, and what the 12-month moratorium really means.
⚡ June 2024: The £90 application fee for a Debt Relief Order was abolished in England and Wales — making formal debt write-off completely free for the first time for people who qualify.At a glance
- A DRO writes off qualifying debts after 12 months if your financial situation does not improve
- To qualify, your debts must total under £30,000, your assets must be worth under £2,000, and you must have less than £75 surplus income per month
- Since June 2024, applying for a DRO is completely free — the previous £90 fee was abolished
- You must apply through an Approved Intermediary such as StepChange or Citizens Advice; you cannot apply directly to the Insolvency Service
- A DRO stays on your credit file for six years from the date it is made
- Not financial or legal advice: This article explains the rules in plain English. For your specific situation, speak to a free debt adviser such as StepChange or National Debtline, or visit Citizens Advice.
A Debt Relief Order sits quietly at one end of the UK's formal debt-relief spectrum, but it is arguably the most accessible route there is. It is designed for people who have very little money and very few assets — but whose debts have reached a point where normal repayment is not realistic. If that sounds like your position, a DRO can feel like a lifeline.
Since June 2024, applying costs nothing. That removed the last significant barrier for the people this scheme was built to help. But the eligibility rules are strict, the restrictions during the process are real, and the consequences of breaking them are serious. This guide walks through everything you need to understand before deciding whether a DRO is right for you.
A DRO is distinct from both an Individual Voluntary Arrangement (IVA) and bankruptcy. It is simpler, shorter, and now free — but only available to people whose debts, assets, and income fall within tight limits.
What is a Debt Relief Order?
A DRO is a formal insolvency arrangement granted by the Official Receiver at the Insolvency Service. When your DRO is approved, a 12-month period called the moratorium begins. During this time:
- Your creditors cannot contact you about the debts included in the DRO
- They cannot start or continue court action to recover those debts
- They cannot add interest or charges to the included debts
- Bailiffs cannot visit you to collect the included debts
If, after 12 months, your situation has not improved enough to repay your debts, they are discharged — written off completely. You are legally released from those obligations and can start again.
The three eligibility tests
A DRO is only available if you pass all three of the following checks at the point of application.
1. Your qualifying debts must total less than £30,000
Not every type of debt can be included. Debts that qualify include credit cards, overdrafts, personal loans, payday loans, utility arrears, council tax arrears, rent arrears, and most buy-now-pay-later balances. Debts that cannot be included are student loans, magistrates' court fines, child maintenance arrears, TV Licence penalties, and any debts arising from fraud. If your total qualifying debt is £30,000 or above, a DRO is not available.
2. Your assets must be worth less than £2,000
This includes savings, investments, valuable possessions, and vehicles. If the combined value of everything you own exceeds £2,000, you will not usually qualify. There is one partial exception: if you rely on a vehicle for work or disability reasons and it is worth less than £2,000, it may be excluded from the asset count. If it is worth more, specialist advice is essential — the rules here depend on individual circumstances.
Owning property, even with negative equity, disqualifies you. A DRO is not the right route if your name is on a mortgage or property title anywhere in the world.
3. Your surplus income must be less than £75 per month
Surplus income is what remains each month after your essential living costs — rent or mortgage, food, utilities, travel to work, and similar — are paid. Your approved intermediary will work through this calculation with you using a standard format. If your surplus is £75 or more at the time of application, you do not qualify, even if all other criteria are met.
Who cannot use a DRO?
Even if you pass all three eligibility tests, a DRO is unavailable if you have had a DRO in the last six years, if you are currently under a bankruptcy restrictions order or undertaking, or if you have been involved in any formal insolvency process in the past six years.
How to apply
You cannot apply for a DRO directly. You must go through an Approved Intermediary — an authorised debt adviser, typically from an organisation such as StepChange, National Debtline, or Citizens Advice. The intermediary assesses your eligibility, helps you complete the application, and submits it to the Official Receiver. There is no fee. If anyone asks you for money to apply for a DRO, treat that as a serious warning sign and stop.
Once submitted, the Official Receiver typically decides within 24 to 48 hours. If approved, you receive a DRO number and the moratorium begins immediately.
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What the 12-month moratorium means in practice
The moratorium pauses legal action on your included debts and stops interest from accumulating. But it also places restrictions on you. During the 12 months of a DRO:
- You cannot borrow more than £500 without telling the lender about your DRO
- You cannot act as a director of a limited company
- You cannot serve as a school governor or trustee of a charity
- If you are self-employed, you cannot trade under a name other than your legal name without disclosing the DRO
If your circumstances change materially during the moratorium — for example, you receive an inheritance, a windfall, or a significant pay rise — you must report this to your approved intermediary immediately. The Official Receiver can revoke your DRO if your surplus income rises above £75 or your assets exceed £2,000. Concealing a change is treated as misconduct and can lead to prosecution.
What happens after 12 months
If your situation has not materially improved, your DRO is discharged. Every qualifying debt listed in it is legally written off. Your creditors have no further claim on those amounts.
Two records remain, however. The first is the Individual Insolvency Register, a public database maintained by the Insolvency Service. Your DRO appears there from the day it is made and is removed three months after discharge — roughly 15 months from the start date. The second is your credit file, where a DRO stays for six years from the date it was made. During that time, obtaining credit, renting a property from a private landlord, and opening some bank accounts will be more difficult.
DRO compared to other debt options
A DRO sits between informal arrangements and the more serious step of bankruptcy. The table below summarises the main differences for people considering their options:
| DRO | IVA | Bankruptcy | |
|---|---|---|---|
| Debt limit | Under £30,000 | No limit | No limit |
| Cost to apply | Free | Typically £1,000+ | £680 |
| Duration | 12 months | 5–6 years | Usually 12 months |
| Assets at risk? | No (if under £2k) | Possibly | Possibly |
| Best suited to | Very low income, minimal assets | Steady income, larger debts | Larger debts or property |
Practical next steps if you think a DRO might apply to you
- List all your debts and check the total against the £30,000 limit. If the total is over that, a DRO is not available.
- List your assets — savings, a car, jewellery, anything of value. If the total is near or over £2,000, take advice before ruling yourself out, as the vehicle exemption may apply.
- Calculate your surplus income honestly. MoneyHelper's budget planner and StepChange's online debt tool can both help.
- Contact an approved intermediary — not a fee-charging debt management company. StepChange (0800 138 1111) and National Debtline (0808 808 4000) are both free, and Citizens Advice can also refer you to a qualified intermediary.
- Do not take on any new credit before applying. Adding new debt could affect eligibility or be viewed as deliberately worsening your situation.
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Frequently asked questions
Is a DRO the same as bankruptcy?
No. They are two separate legal processes. Bankruptcy costs £680, handles any size of debt, and can involve assets being sold to pay creditors. A DRO is now free, is limited to debts under £30,000, and only applies to people with minimal assets. Both last 12 months and both appear on your credit file for six years.
How will a DRO affect my credit score?
A DRO is recorded on your credit file for six years from the date it is made. During that period, lenders, landlords, and some employers may carry out credit checks and find the record. After six years, it is automatically removed. There is no way to speed this up, but many people begin rebuilding their credit profile before the six years is up.
Can I include council tax debt in a DRO?
Yes. Council tax arrears from a previous year can be included in a DRO. Your current year's council tax continues to accrue and you remain responsible for paying it — it does not get swept up in the DRO automatically. Make sure you separate out what you owe from previous years and what you owe for the current billing period.
What happens to my bank account when a DRO is approved?
Some banks will close your current account when a DRO is registered, particularly if you owe money to that same bank. Ask your approved intermediary about this before applying. Basic bank accounts — offered by most high-street banks under the government's basic bank account initiative — are usually available during a DRO and are a practical fallback if your main account closes.
Can my landlord evict me because I have a DRO?
A DRO does not automatically trigger eviction, but if rent arrears are included in your DRO, your landlord may seek possession on the basis of those arrears. The moratorium pauses your landlord's ability to recover the arrear amounts themselves, but does not prevent a possession claim. If you rent and have rent arrears, discuss this specifically with your approved intermediary before applying.
Can I apply for a DRO if I am self-employed?
Yes. Self-employed people can apply, and business income and business assets are included in the eligibility tests alongside personal ones. During the moratorium, you cannot trade under a business name that differs from your legal name without disclosing the DRO. If you run a business with employees or contracts, take specialist advice before applying.
What if I forgot to include a debt in my DRO?
Debts that are not listed in your DRO are not covered by it. They will still be owed in full and your creditors can still chase them after discharge. It is important to list every qualifying debt when you apply. If you discover an omission after your DRO has been made, contact your approved intermediary as soon as possible to understand your options.
What is the difference between a DRO and a Debt Management Plan?
A Debt Management Plan (DMP) is an informal arrangement where you pay a reduced amount to your creditors over an extended period. Nothing is written off — you still repay everything eventually, just more slowly. A DRO is a formal legal process that, if everything goes to plan, writes off qualifying debts entirely after 12 months. A DMP does not restrict your ability to be a company director or borrow money in the same way, but it does not offer a clean break either. StepChange can help you compare both options based on your actual numbers.
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This article is for general information only and does not constitute financial or legal advice. The rules around Debt Relief Orders are set by legislation and may change. For advice specific to your situation, contact a free, regulated debt adviser such as StepChange (0800 138 1111), National Debtline (0808 808 4000), or visit Citizens Advice.