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Debt Relief Order (DRO): What You Need to Know in 2026

Written by helpwithdebstg on . Posted in News.

Updated for 2026

What is a Debt Relief Order?

A Debt Relief Order (DRO) is a formal insolvency solution available to people in England and Wales who have low income, few assets, and debts they genuinely cannot repay. It is designed specifically for those who are in serious financial difficulty but do not have the means to enter an Individual Voluntary Arrangement (IVA) or pay the fee for bankruptcy.

Once approved, a DRO places a 12-month moratorium on your qualifying debts. During that period, your creditors cannot contact you, add interest or charges, or take enforcement action. If your financial situation has not materially improved at the end of the 12 months, all the debts included in the order are written off completely.

Crucially, applying for a DRO is entirely free. The £90 application fee that previously applied was abolished in June 2024, removing one of the key barriers that stopped people in genuine hardship from accessing this form of debt relief.

Who Can Apply for a Debt Relief Order?

To qualify for a DRO, you must meet all of the following criteria at the time your application is submitted:

  • Total qualifying debts of no more than £50,000. This threshold was raised from £30,000 in June 2024, making DROs accessible to a significantly larger number of people. Eligible debts include credit cards, personal loans, overdrafts, utility arrears, council tax arrears, and rent arrears.
  • Disposable income of less than £75 per month. After paying all essential living costs — rent or mortgage, food, utilities, and travel to work — you must have less than £75 per month remaining. If you have more spare income than this, a DRO is not available to you.
  • Total assets worth less than £2,000. This includes savings, valuables, and equipment, but excludes basic household furniture and tools needed for your employment. The limit was raised from £1,000 in 2021.
  • No vehicle worth £4,000 or more. You may own one vehicle, provided it is valued below £4,000. If your vehicle exceeds this limit, you do not qualify unless it has been adapted for a disability. This threshold was doubled from £2,000 in June 2024.
  • Not a homeowner. If you own any share of a property — whether freehold, leasehold, or part-ownership — you cannot apply for a DRO. Homeowners with unmanageable debt should instead consider an IVA or bankruptcy.
  • Not subject to another insolvency procedure. You cannot already be in a DRO, an IVA, or undischarged bankruptcy at the time of application.
  • No DRO in the last six years. If you have had a DRO approved within the previous six years, you are not eligible to apply for another one.
  • Living or working in England or Wales. Scotland has its own debt solutions. You must have been resident or carrying on business in England or Wales within the last three years.

How to Apply for a DRO

Unlike bankruptcy, you cannot apply for a Debt Relief Order yourself. The application must be submitted by an approved intermediary — a debt adviser who is authorised by a competent authority recognised by the Insolvency Service. This is an important safeguard to ensure the process is used correctly and that applicants genuinely meet the eligibility criteria.

Approved intermediaries are typically found at free debt advice charities and organisations. The process works like this:

  1. Seek free debt advice. Contact a free, regulated debt advice organisation. A qualified adviser will assess your income, debts, and assets in detail to determine whether a DRO is the right option for your situation.
  2. Gather your financial information. You will need a complete list of all your debts, a clear picture of your monthly income and outgoings, and a list of everything you own. Your adviser will help you compile this information accurately.
  3. Application submitted at no cost. Your approved intermediary submits the application electronically to the Insolvency Service’s Adjudicator. There is no application fee payable by you.
  4. DRO approved and registered. If the application is accepted, the DRO is registered on the Individual Insolvency Register and the 12-month moratorium begins immediately.

What Happens During the 12-Month Moratorium?

Once your DRO is in place, you receive immediate relief from creditor pressure. All creditors listed in the DRO must stop contacting you, cannot add further interest or charges to the debts, and cannot take any enforcement action — including sending bailiffs or applying for county court judgments.

However, there are important restrictions you must follow during the moratorium period:

  • You must not borrow £500 or more without disclosing to the lender that you are subject to a DRO
  • You cannot act as a company director or be involved in forming or managing a limited company without the court’s permission
  • Any significant improvement in your financial circumstances — such as receiving an inheritance, a windfall, or a substantial pay rise — must be reported to the Insolvency Service promptly
  • If your circumstances improve enough that you no longer meet the eligibility criteria, the DRO may be revoked

What Debts Are Not Covered?

While a DRO covers most types of unsecured debt, certain debts cannot be included and will remain your responsibility regardless:

  • Student loans
  • Child support and maintenance arrears
  • Court fines and criminal fines
  • Social Fund loans
  • Debts incurred through fraud

It is important to identify any debts of this type before applying, as they will still need to be dealt with separately after the DRO is approved.

How Does a DRO Affect Your Credit File?

A Debt Relief Order will appear on your credit file for six years from the date it is approved. During this time, obtaining mainstream credit, a mortgage, or many financial products will be very difficult. However, for people who are already in serious debt distress, the practical impact on their credit file is often less significant than the immediate relief the DRO provides.

The DRO is also listed on the public Individual Insolvency Register. It is removed from the register three months after the moratorium period ends — typically 15 months after the DRO started.

DRO vs Bankruptcy: Which Is Right for You?

Both a DRO and bankruptcy result in debts being written off, but they suit different circumstances:

  • DRO is free, requires no income contributions, and is appropriate for people with debts under £50,000, no assets above £2,000, and no home ownership. It is generally the simpler and less severe option where eligibility is met.
  • Bankruptcy costs £680 to apply for, can include people with higher levels of debt and those who own property (though home equity is at risk), and also lasts 12 months before discharge. It is a more powerful tool for people with larger debts or who do not meet the DRO eligibility criteria.

A free debt adviser can help you determine which option is more appropriate for your individual situation.

Find Out What Options Are Available to You

Everyone’s situation is different. Use our free fact-finder to see which debt solutions you may be eligible for — no obligation, no commitment.

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For free, impartial debt advice you can contact Money Helper at moneyhelper.org.uk

The information on this page is for general guidance only and does not constitute financial advice. Always seek independent professional advice before making a decision about a debt solution.