Debt relief orders (DROs): how they work and who qualifies

A debt relief order (DRO) is a formal insolvency solution for people in England, Wales and Northern Ireland who cannot pay their debts and have little to lose. You pay nothing towards the debts listed in the order for 12 months, and at the end of that period, provided your circumstances have not improved, those debts are written off¹. It is free to apply, there is no court hearing, and creditors named in the order cannot take action against you during the 12 months without the court's permission².

DROs are aimed at a specific group: people who owe £50,000 or less, have assets worth no more than £2,000 (plus a car worth up to £4,000), and have £75 a month or less spare after essential living costs⁴. They were introduced in April 2009 as a low cost alternative to bankruptcy, and since the £90 application fee was abolished on 6 April 2024 they have been running at historically high levels³. In the 12 months to 31 August 2026, DROs accounted for 35% of all individual insolvencies in England and Wales³.

What a debt relief order does: 12 months, then debts written off

A DRO freezes your debts rather than restructuring them. Once the order is made, you stop making payments towards the debts and interest listed in it, and interest and charges stop being added⁸. For the next 12 months, a period called the moratorium, the creditors named in the order cannot take any action to recover their money without permission from the court². Nothing is paid to creditors from the order at all: there is no distribution, and discharge from the debts takes place 12 months after the DRO is granted³.

At the end of the 12 months, provided your circumstances have not changed, you are freed from all the debts included in the DRO². The write-off is conditional in both directions. If your finances do not improve, the debts are gone for good¹. If they do improve, the DRO can be cancelled and you would have to start paying again¹. As long as you still meet the qualifying criteria throughout the 12 months, your debts will be written off⁵.

The moratorium usually runs for 12 months but can be shorter or longer⁹. The official receiver may extend it, but not beyond the end of the period of three months beginning after the end of the initial year¹⁰. In most cases the moratorium period is one year from the date the order is entered in the register¹¹.

Who qualifies: debts up to £50,000, assets under £2,000 and £75 spare income

To qualify for a DRO you must be unable to pay your debts and meet four monetary tests²:

The £2,000 asset limit covers items such as savings and anything else of value, though items such as clothing, furniture and tools for use in employment or a business may be disregarded². The car allowance is separate: you can own a car to the value of £4,000 without it counting towards the £2,000².

The spare income test is strict. If you have more than £75 a month left after paying your household bills and essential living costs, you do not qualify¹. The £75 figure is the line the Insolvency Service uses, and if your surplus creeps above it during the DRO you must say so (see below).

Beyond the numbers, there are other conditions:

• You cannot get a DRO if you are a homeowner, even if the property is in negative equity¹. Because of the asset restriction, the scheme is not suitable for homeowners².
• You must not have had a DRO in the last six years, although you may still qualify if your previous DRO was cancelled⁴.
• You must not be involved in another formal insolvency procedure at the time you apply: you cannot get a DRO if you are already bankrupt, in an individual voluntary arrangement (IVA) or under an interim order, subject to a bankruptcy restrictions order or undertaking or a debt relief restrictions order or undertaking, or have a bankruptcy petition pending unless a court has referred you for a DRO¹⁴.
• You must tell the adviser about any asset you gave away, or sold for less than it was worth, in the last two years⁴.

DROs are suited to people with a low amount of debt and few assets¹⁵. If your debts are above £50,000, or you have more than £75 a month spare, other options such as an IVA, a debt management plan or bankruptcy may fit better, and a free debt adviser can work through them with you.

Debts a DRO covers and debts it leaves out

A DRO covers unsecured debts: things like credit cards, personal loans, overdrafts and catalogue debts, plus arrears on household bills such as council tax, gas and electricity¹⁶. The debts must be for an identifiable amount of money and must not be secured on anything¹¹. Once the order is approved, creditors must stop all collections activity, are not allowed to add interest and charges, and cannot take further action against the debtor¹⁷.

Some debts cannot go in, and they still have to be paid after the DRO ends⁴:

• magistrates' court fines
• maintenance, Child Support Agency (CSA) and Child Maintenance Service (CMS) payments and arrears
• student loans
• budgeting loans and crisis loans
• criminal confiscation orders
• certain personal injury claim debts⁴

Official guidance for creditors also lists criminal or civil court fines, the TV licence and child maintenance among the excluded debts¹⁸. Debts that are the result of fraud will not be discharged, and you will still have to pay those⁸. The full list is covered in more detail in debts that cannot go into a debt relief order.

Two other rules matter. A DRO does not clear the debt for a joint debt holder or a guarantor: they remain liable for the whole amount¹⁸. And a debt left out of the application cannot be added later (see below), so the application needs to be complete.

Hire purchase and conditional sale agreements are treated specially. If you are not in arrears, you can choose to exclude the whole balance from the DRO and keep the goods, but the payments only count as an allowable expense if the vehicle is worth less than £4,000, the item covers a basic domestic need, or you have a disability and the vehicle is adapted⁴. Logbook loans work differently again: the lender takes ownership of the vehicle from the start of the loan until it is paid back, and can take and sell the vehicle if you do not repay, though you can still use it meanwhile¹⁹. If a bill of sale is not registered, the lender must get a court order to repossess your vehicle²⁰.

No fee to apply: how a DRO compares with bankruptcy

There is no fee to apply for a DRO⁷. You submit your application to the Insolvency Service for free¹. This is a recent change: following an announcement on 6 March 2024, the £90 administration fee to obtain a DRO was abolished on 6 April 2024³. Before that, the fee was widely criticised; the FCA's Woolard review noted in 2021 that "it is unfair when the very poorest are asked to provide £90 for a DRO application"²¹.

The removal of the fee has changed how the solution is used. Monthly numbers of DROs have been at historically high levels since the abolition of the upfront £90 fee in April 2024²², and the government's own assessment of the eligibility changes was that they aimed to ensure the most financially distressed consumers could access a proportionate solution²³.

The comparison with bankruptcy is the point of the product. A DRO is a form of insolvency designed as a low cost alternative to bankruptcy, for people on a low income with a relatively low level of debt who cannot pay off their debts in a reasonable amount of time²⁴. The two share a discharge timetable: discharge from bankruptcy usually takes place 12 months after the bankruptcy order is granted, just as DRO discharge takes place 12 months after the order is granted³. But DROs do not involve the courts, you will not have to go to court, and for some people a DRO is a cheaper alternative to full bankruptcy². The trade-off is the strict asset and income limits: bankruptcy can handle larger debts and, in some circumstances, property, while a DRO cannot. The comparison is set out side by side in DRO or bankruptcy, and the costs of every solution in what debt solutions cost.

How to apply through an approved intermediary

You cannot apply for a DRO on your own. The application must be made to the official receiver through an approved intermediary, a special debt adviser authorised to manage DRO applications¹⁰. DROs are run under a partnership between the Insolvency Service and skilled debt advisers, called approved intermediaries, and the application is made online, with the intermediary completing the forms on the applicant's behalf².

The practical steps are:

1. Get free debt advice first. An adviser will check your full financial situation and whether a DRO is the right solution among the alternatives²⁷.
2. If a DRO is right for you, the adviser (as approved intermediary) prepares the application, listing every debt, your assets and your income¹.
3. The intermediary submits the application online, completing the online forms on your behalf²⁶.
4. The official receiver decides whether to make the order. If it is made, the order is entered on the register and the moratorium starts¹¹.
5. Once approved, you stop making payments towards the debts and interest listed in the DRO⁸.

Approved intermediaries work for free debt advice charities, so the application itself costs nothing⁷. Free, impartial advice is available from the charities listed in free debt advice, and it is worth checking an adviser is legitimate before sharing financial details, as explained in how to tell if a debt adviser is legitimate.

What creditors, bailiffs and landlords can and cannot do during the 12 months

During the moratorium, a creditor listed in the DRO has no remedy in respect of the debt and may not commence a creditor's petition or any other legal proceedings against you for the debt, except with the permission of the court²⁸. In practice, creditors must stop all collections activity: they are not allowed to add interest and charges and cannot take further action against you¹. Interest and charges stop being added to your debts¹.

There are edges to this protection:

• Creditors can still take action to recover assets in some cases³⁰.
• Creditors not listed in the DRO are not bound by it, which is one reason the application must list every debt.
• Bailiffs stop trying to recover a debt only if it is included in your DRO, your DRO is approved, and no goods have been taken into control¹⁵. If goods have already been taken, the DRO does not unwind that.
• The moratorium may not be extended beyond the end of the period of three months beginning after the end of the initial year¹⁰.

If a creditor listed in the order contacts you or takes action anyway, tell the Insolvency Service. If you are facing bailiff action, your rights are set out in bailiffs and enforcement agents, and the rules on how creditors enforce a court judgment explain what enforcement looks like outside insolvency.

Restrictions while you have a DRO

While the DRO runs you stop making payments towards the listed debts, but the order also places restrictions on you⁸. These include not being allowed to act as a company director, not borrowing over £500 without telling the lender about the DRO, and not creating or promoting a company without court permission⁶. You also cannot run a business in a different name without telling everyone you do business with the name you used for your DRO⁴.

The restrictions normally end when the DRO ends, but they can be extended with a debt relief restrictions order or undertaking, usually where there has been dishonest behaviour⁶. A debt relief restrictions order can last between 2 and 15 years after the date of the DRO⁴, and it can be imposed for failing to inform the official receiver of a change in circumstances³². If one is made, your details stay on the Individual Insolvency Register for the lifetime of the order plus an extra three months¹⁴.

How a DRO affects your credit file, job and bank account

A DRO is recorded in three places, for three different lengths of time:

The register entry is public: your DRO shows on a public register for 15 months¹. The credit file entry is the longer shadow. A DRO stays on your credit file for six years after it starts, which means lenders will see it for years after the debts have gone¹. How credit files work and how to check yours is covered in credit scores and credit reports.

Your bank account is not necessarily frozen when the DRO is approved; the bank or building society decides, and it is likely to be frozen if you have a debt with them¹⁴. Many people open a basic account with a bank they do not owe money to before applying.

On your job, the restrictions above are the main issue: the company director ban and the duty to disclose the DRO when borrowing over £500⁶. Some employers, particularly in financial services, ask about insolvency in their own checks, and the DRO's presence on the public register means it is visible to anyone who searches.

When a DRO can be cancelled

A DRO can be cancelled (revoked), and the consequences are serious. The official receiver may revoke the order on grounds including incomplete, incorrect or misleading information, failure to comply with a duty, a bankruptcy order being made, or the debtor proposing an IVA³⁶. The Insolvency Service can also cancel a DRO if it learns you were not in fact eligible when you applied or at any time during the DRO period, even after the DRO has ended⁸.

The main triggers are:

• Your finances get better during the moratorium period and you no longer meet the criteria¹.
• You lied in your application, or supplied incomplete or misleading information³¹.
• A debt you left out takes your total debts over £50,000, in which case the official receiver will consider revoking the DRO¹⁴.

If the DRO is cancelled, you have to start making payments for the listed debts, pay any interest that accrued during the DRO, and creditors can add penalties to what you owe⁸. Creditors can still add interest and charges during the moratorium; it has no effect on you unless your DRO is cancelled, at which point it lands²⁴.

A debt left out of the application cannot be included later, and that creditor can continue to take action¹⁴. One further rule limits reapplying: you cannot apply for a DRO for six years after a successful application, even if the DRO is cancelled after approval¹⁷.

Scotland and Northern Ireland: different rules and alternatives

DROs are not available in Scotland¹. Scotland has its own set of solutions: the Debt Arrangement Scheme (DAS), protected trust deeds and sequestration, including the Minimal Asset Process, which plays a similar role for people with few assets. The nations guide explains how money rules differ across the UK.

Northern Ireland does have DROs, under its own legislation, and the scheme is similar to the one in England and Wales³⁷. The debtor must be domiciled in Northern Ireland on the application date, or have been living or carrying on business there at some time within the last three years¹¹. Applications go to the Official Receiver³⁷, and at the end of the 12 months the debtor is fully discharged from liability to pay the debts covered by the order³⁷.

The monetary limits in Northern Ireland were raised to match England and Wales: a 2024 rule amended the prescribed amount for a debtor's overall indebtedness from £20,000 to £50,000²⁶. The vehicle exemption there is £2,000 under the Insolvency Rules (Northern Ireland) 1991²⁶, which differs from the £4,000 car allowance in England and Wales, so check the current position with a Northern Ireland adviser before applying. Guidance for Northern Ireland is published by the Department for the Economy², and Advice NI notes that there is no fee for a DRO there³⁴. Bankruptcy in Northern Ireland is covered separately in bankruptcy in Northern Ireland.

Wherever you live, the first step is the same: free, impartial debt advice, from a charity or from MoneyHelper, before committing to any formal solution. The full range of options is set out in debt solutions across the UK.