What is a Debt Relief Order?
A Debt Relief Order (DRO) is a formal way to deal with debt, aimed at people who owe a relatively small amount, have very little spare income, and few assets. It’s available in England, Wales and Northern Ireland; Scotland has its own equivalents. If you qualify, your included debts are frozen for a period — usually 12 months — and if your circumstances haven’t improved by the end, those debts are written off.
How does a DRO work?
A DRO is applied for through an approved intermediary and is administered by the Insolvency Service. During the DRO period you don’t make payments towards the debts included, and the creditors listed can’t take action to recover the money. At the end of the period, if you still meet the conditions, the debts are cleared — giving you a genuine fresh start.
Am I eligible for a DRO?
DROs have strict eligibility criteria, based on how much you owe, your spare income, and your assets. As a guide, you may qualify if:
- Your total qualifying debts are within the current DRO limit.
- You have very little spare income each month after essential living costs.
- Your assets and any savings are below the allowed threshold.
- You don’t own your home.
- You live, or have recently lived or worked, in England, Wales or Northern Ireland.
The exact financial limits are set by the government and are reviewed from time to time, so it’s important to check the current thresholds and get advice before applying, rather than relying on old figures.
Not everyone qualifies. The limits on debt, income and assets are strict by design — DROs are meant for people with very little. If you don’t qualify, don’t worry: other options like a DMP or IVA may suit you, and we can explain them.
What are qualifying debts?
Most everyday debts can be included, such as credit cards, personal loans, overdrafts, catalogues, rent and utility arrears, and benefit overpayments. Some debts can’t be included, such as certain court fines, student loans and secured debts. Advice will confirm exactly which of your debts a DRO would cover.
Weighing it up
Potential benefits
- No payments to make during the DRO period
- Included creditors must stop recovery action
- Debts written off if you still qualify at the end
- Much lower cost than bankruptcy
- A genuine fresh start for those who qualify
Things to consider
- Strict eligibility limits — not everyone qualifies
- Affects your credit rating for six years
- Recorded on the public Individual Insolvency Register
- Not all debts can be included
- Homeowners generally won’t qualify
Frequently asked questions
How much debt can I have for a DRO?
There’s a maximum total of qualifying debt, plus limits on your spare income and assets. These thresholds are set by the government and reviewed periodically, so check the current limits and get advice before applying.
Do I make payments during a DRO?
No. During the DRO period, which is usually 12 months, you don’t make payments towards the debts included, and those creditors can’t pursue you for them.
Will a DRO affect my credit rating?
Yes. A DRO affects your credit rating and stays on your credit file for six years. It’s also recorded on the public Individual Insolvency Register while it’s active.
Can I get a DRO if I own my home?
Generally no. DROs are designed for people with few or no assets, and homeowners usually won’t qualify. Other solutions may be more appropriate, and we can talk you through them.
What happens at the end of a DRO?
If you still meet the eligibility conditions at the end of the period, the debts included are written off and you’re free of them. If your circumstances improved significantly during the period, the DRO could be revoked.
How much does a DRO cost?
There’s a modest application fee, which is much lower than the cost of bankruptcy. If money is very tight, free debt advice organisations can help you understand the cost and whether a DRO is right for you.
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