A Debt Relief Order (DRO) can write off most of your unsecured debts after a year, at no cost, if you have very little coming in and very little you own. It is also a formal insolvency order, with a public record, criminal offences and ways of losing it, so check the rules below before you apply.
This page covers England and Wales; Scotland and Northern Ireland have their own rules. It is general information, not personal financial advice or regulated debt advice.
Quick answer
A DRO is for people who owe £50,000 or less, have £75 a month or less left after reasonable household costs, have assets of £2,000 or less and have no vehicle worth £4,000 or more. It costs nothing, and you apply through an approved intermediary. Listed debts are usually written off after one year, and the DRO stays on your credit file for about six years. Three things catch people out: anything you paid or gave away in the last two years, what a DRO does not stop and money that comes to you during the year.
Who can get a DRO
You must be unable to pay your debts and meet every test below. The figures are in the Insolvency Service’s manual for official receivers, the officials who decide. The £50,000 and £4,000 limits went up on 28 June 2024, so older articles and videos may show lower figures.
| Test | The limit | What catches people out |
|---|---|---|
| Debts | £50,000 or less | Excluded debts do not count towards the limit. Every other debt does, so a forgotten one can tip you over. |
| Spare income | £75 a month or less | It is worked out on a formal budget, not your own estimate. See below. |
| Assets | £2,000 or less | The figure is gross, so a home with a mortgage still counts at its full value. The Insolvency Service says a homeowner is highly unlikely to qualify. |
| Vehicle | Under £4,000 is left out | It takes the highest realistic sale value. A specially adapted vehicle has its own rule. |
| Where you live | England or Wales | Domicile, or living or running a business here in the last three years. |
| History | No DRO in the last six years | You also cannot be in another insolvency procedure or under bankruptcy or debt relief restrictions. |
| The last two years | No preference or undervalue | This is the test most people have not heard of. See below. |
Not sure a DRO fits?
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We’ll go through what you owe and own, anything paid or given away in the last two years, and the other routes open to you. Prefer to start on your own? The free Budget Planner is yours to use.
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Prefer to watch first? This video goes through what to know before you go down this route: the two-year look back, what a DRO does not stop and how it can be undone.
The two-year look back: paying or giving before you apply
Many people want to do the decent thing first: repay a parent, settle one card, or pass the car to a relative. Those are exactly the things this test looks for.
Insolvency Act 1986, Schedule 4ZA, paragraph 10(2) (verbatim)
“…the debtor does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which, in the event that a debt relief order is made in relation to the debtor, will be better than the position he would have been in if that thing had not been done.”
Source: legislation.gov.uk
In plain English: that is a “preference”. It means leaving one creditor, or someone who guaranteed a debt, better off than they would have been. Paragraph 9 does the same job for an “undervalue”: a gift, or selling something for significantly less than it is worth. Both tests cover the two years before you apply, up to the day your application is decided.
- What is looked at: the Insolvency Service considers the amount, the timing and the reason.
- “They were pressing me” may not save you: its published rules say creditor pressure is not a good answer unless it was your only motive.
- Not everything counts: deductions under an attachment of earnings order are not a preference, and normal contract payments on a phone are not reported as one. Paying off phone arrears is reported.
Do not leave any of this out. A DRO can be revoked if your information was incomplete or misleading, and hiding it can bring restrictions of up to 15 years. If you have already made a payment like this, tell the intermediary the full story before the application goes in. If you have not applied yet, speak to them before you pay anyone a lump sum.
How to apply, and who pays
You cannot apply on your own. An approved intermediary checks your figures and submits the application online, and an official receiver decides.
Insolvency Act 1986, section 251U(7) (verbatim)
“An approved intermediary may not charge a debtor any fee in connection with an application for a debt relief order.”
Source: legislation.gov.uk
In plain English: the application is free. The £90 fee ended on 6 April 2024, and nobody acting as an intermediary may charge you for it. The cost falls on your creditors, who lose the debts, and on you, through the record and the restrictions below.
What a DRO stops and what it does not
Insolvency Act 1986, section 251G(2) (verbatim)
“During the moratorium, the creditor to whom a specified qualifying debt is owed— (a) has no remedy in respect of the debt, and (b) may not— (i) commence a creditor’s petition in respect of the debt, or (ii) otherwise commence any action or other legal proceedings against the debtor for the debt, except with the permission of the court and on such terms as the court may impose.”
Source: legislation.gov.uk
In plain English: for about a year, listed creditors cannot make you pay or take you to court without the court’s permission. GOV.UK adds that they cannot ask you for payment, but can still send statements and general correspondence. Statements arriving does not mean something has gone wrong.
| Situation | During a DRO |
|---|---|
| Listed creditor asks you to pay | Not allowed. Tell them about the DRO: use the letter below. |
| Interest and charges on a listed debt | Can still be added (s.251G(4)), but they are written off with the debt. |
| Bailiffs on a listed debt | Cannot take control of goods once the order is made, unless they already have. A controlled goods agreement already signed effectively secures the debt, so those payments must carry on. |
| Landlord seeking possession | Not stopped. Rent arrears can be listed, but the landlord does not need the court’s permission to seek possession. |
| Mortgage or other secured lender | Not stopped. “Nothing in this section affects the right of a secured creditor” (s.251G(5)). |
| Guarantor or joint borrower | Not protected. The DRO only covers you, so the creditor can still pursue them (s.251I(4)). |
| Your bank account | May be frozen or closed if you owe that bank; it is the bank’s decision. Before approval, a bank may also be able to move money across to a debt you owe it. |
| Current bills | Keep paying rent, council tax, energy, food and your TV licence. |
Free template
If a creditor still asks you to pay during a DRO
Copied. If a DRO is not the route for you, you can hand your creditor letters over to us.
Use this only once your DRO has been made and only for a debt listed in it. Replace everything in the highlighted brackets and use the full account reference from the creditor’s latest letter. Prefer to print it? Download the PDF.
[Your full name]
[Your address]
[Date]
[Creditor or collector name]
[Their address, from their latest letter]
Account reference: [the full reference from their letter]
Dear [creditor or collector name],
A Debt Relief Order was made in my name on [date the order was made], and this account is listed in it. You can check this on the Individual Insolvency Register.
Under section 251G of the Insolvency Act 1986, during the moratorium a creditor owed a listed debt has no remedy for that debt and may not start legal action for it without the court’s permission.
You asked me for payment in your [letter, email or call] of [date]. Please stop asking me for payment on this account, and make sure anyone acting for you does the same. You may still send statements and general correspondence.
Please reply in writing to confirm that your records have been updated.
Regards
[Your first name]
Or hand it all over
Is a DRO not the route for you?
If you are still dealing with several creditors, Full Support takes that off you. You send us the letters and we take it from there. We prepare your replies in your words for you to approve, keep track of what comes back and follow up when a creditor goes quiet, until every creditor has agreed. One fixed fee, quoted free within one working day.
Get my free quote →Free to ask. You only pay if you accept your quote. Prefer to do it yourself? The letter above is free to copy.
Which debts are in and which are out
| Can be listed and written off | Stays with you |
|---|---|
| Credit and store cards, loans, overdrafts, buy now pay later | Fines, and confiscation orders |
| Rent, gas, electricity and phone arrears | Child maintenance and other family court orders |
| Council tax and income tax arrears | Student loans, including interest |
| Benefit overpayments | Social Fund crisis and budgeting loans |
| Money owed to friends and family | Damages for death or personal injury |
The right-hand list comes from rule 9.2 of the Insolvency Rules 2016. Three other points matter:
- Secured debts are not qualifying debts to the extent they are secured. If a car on finance or a home is sold and leaves a shortfall, that shortfall is treated as unsecured.
- Debts from fraud are not released at the end of the DRO (s.251I(3)).
- Statute-barred debts can be left off if the intermediary is satisfied, with evidence, that the time limit has passed. Check your dates first.
List everything else. You cannot add a debt to the order later (s.251L(9)), so one you forget stays with you.
What counts towards the £2,000
Savings, cash in the bank on the day and things you could sell all count. There is no allowance for savings. Rule 9.9 leaves these out:
- One vehicle worth less than £4,000, or one specially adapted for you because of a long-term physical impairment. If you have two vehicles, the second counts towards the £2,000.
- Tools and equipment you need for your job. A vehicle does not count as a tool of the trade.
- Clothing, bedding, furniture and household equipment you need for basic domestic needs.
- Most rented tenancies.
Lump sums of PIP, Disability Living Allowance and Attendance Allowance are also left out, before and after the order. Wedding rings do count. Get a guide valuation for your vehicle, because an instant-sale quote is not accepted.
A car on finance
A car on hire purchase is not usually yours until it is paid off. You can only keep up the payments as an allowable cost if the car is worth under £4,000, is adapted for you, or is needed for basic domestic needs. Otherwise it may have to go back, so ask about this first.
Pensions
A pension is not automatically ruled in or out. If you can access enough of it, together with your other assets, to repay all your debts, you are not eligible, even if you are not drawing it. Pension payments you do receive count as income.
How the £75 test works
Insolvency Act 1986, Schedule 4ZA, paragraph 7(2) (verbatim)
“…the amount by which a person’s monthly income exceeds the amount necessary for the reasonable domestic needs of himself and his family.”
Source: legislation.gov.uk
In plain English: it is not what is left in your account at the end of the month. All your income counts, including child benefit and contributions from family members. Ongoing disability benefits count too, but related care costs can be set against them. Costs are tested against the Standard Financial Statement, and there is no allowance for saving. Rent arrears are not an allowable cost, even if a court has ordered you to pay them.
The free Budget Planner gives you a first figure in a few minutes. It is your starting point, not the official result.
During the year: rules that can undo it
A DRO is based on your position when you apply, and you have to keep the official receiver informed:
- Tell them about changes. You must report any rise in income, any property you get and any errors in your application (s.251J(5)). An inheritance counts from the date of death, not the day it is paid.
- Do not borrow £500 or more without saying so. It is a criminal offence to get credit of £500 or more, alone or jointly, without telling the lender about your DRO. Credit includes hire purchase and being paid in advance for goods or services (s.251S).
- Mind the company and trading rules. You cannot act as a company director or be involved in running a company without the court’s permission, or trade under another name without telling people the name on your DRO.
- Keep your paperwork. A creditor has a right to object within 30 days of being told, but only on the eligibility tests (s.251K).
If the order is revoked, the debts come back, along with the pressure you thought had gone (s.251L). Before revoking for a change in your income or assets, the official receiver must give you the chance to arrange payments, and can delay the revocation by up to three months.
Restrictions of up to 15 years
If the official receiver finds certain behaviour, the Secretary of State can seek a Debt Relief Restrictions Order, or you can agree an undertaking. It lasts between 2 and 15 years from the day it is made, and keeps the credit, company and trading rules in place. Schedule 4ZB lists what the court looks at, including:
- A preference, an undervalue or excessive pension contributions.
- Incurring a debt with no reasonable expectation of being able to pay it.
- Gambling, rash speculation or unreasonable extravagance.
- Failing to supply goods or services you were paid for, or trading when you knew you could not pay your debts.
- Fraud, or failing to co-operate with the official receiver.
The public register and your credit file
- Individual Insolvency Register: your name and address are public during the DRO and for three months after, so about 15 months. Anyone can search it.
- Credit file: usually six years. You can expect credit to be harder to get in that time.
- If you are at risk of violence: you can ask the court for a person at risk of violence order to keep your address off the register. You must have it before the application is submitted, so raise this at your first contact.
When a DRO is not the answer, and what to compare
Meeting the limits does not make a DRO the right choice. It may not suit you if you expect a lump sum this year, want to protect a home or a financed car, or could be affected in your job by an insolvency record.
| Option | What it is | Main risk |
|---|---|---|
| Token payments | A small monthly offer to each creditor. Not insolvency. | The debts remain, defaults can still happen, and a payment can restart a time limit. |
| Breathing Space | Up to 60 days’ protection through an authorised debt service. | It only pauses things. It is not a solution in itself. |
| Bankruptcy | Formal insolvency, including above the DRO limits. | An application fee, and your assets, including your home, can be at risk. |
| IVA | A formal agreement to pay creditors over several years. | Fees, and it can fail. |
| Debt Management Plan | An informal plan to repay through a provider. | Long-term, can be costly where fees are charged, and creditors do not have to agree. |
Before you apply: six checks
- List every debt, including old ones, joint ones and money owed to family, with its balance and reference.
- Write down the last two years: any lump sum to one creditor, any gift and anything sold cheaply.
- Value what you own, including your vehicle and any pension you can access.
- Work out your budget with the Budget Planner, with three months of payslips or benefit letters and bank statements.
- Think about the next 12 months: any inheritance, redundancy money or insurance payout you expect, and whether an insolvency record could affect your job or tenancy.
- Raise any safety concern about your address first, because the court order has to come before the application.
FAQs: Debt Relief Orders in England and Wales
How much does a DRO cost?
Nothing. The £90 application fee ended on 6 April 2024, and the Insolvency Act 1986 says an approved intermediary may not charge you any fee in connection with the application.
Can I apply for a DRO myself?
No. Every application in England and Wales goes through an approved intermediary, who checks your figures and submits it. An official receiver at the Insolvency Service then decides.
What are the DRO limits in 2026?
Debts of £50,000 or less, not counting excluded debts. Spare income of £75 a month or less after reasonable household costs. Assets of £2,000 or less. A vehicle worth under £4,000 is left out of the asset count; one worth more usually rules a DRO out unless it is specially adapted.
Can I pay back a family member before I apply for a DRO?
Be careful. Repaying one creditor in a way that puts them in a better position can count as a preference, and a preference in the two years before you apply, or before the decision, can mean no DRO. Tell the intermediary about any such payment before the application goes in.
How long does a DRO last?
Usually one year. The official receiver can extend it by up to three months in limited cases. If the order is not revoked, you are released from the listed debts at the end, apart from any debt incurred through fraud.
Does a DRO stop a landlord evicting me?
No. Rent arrears can be listed in a DRO, but the landlord can still seek possession, before or after the order, without the court’s permission. You also have to keep paying your current rent.
How does a DRO affect my credit file?
It usually stays on your credit file for six years. Your name also goes on the public Individual Insolvency Register during the DRO and for three months after it ends, so about 15 months in a normal case.
What happens if a DRO is revoked?
The debts come back and creditors can pursue them again. An order can be revoked if your information was incomplete or misleading, you did not do what the order requires, or your income or assets later take you over the limits.
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