Debt Relief Order (DRO): Free Debt Write-Off for Up to £50,000

A Debt Relief Order writes off up to £50,000 of debt with no monthly payments and no upfront cost. It’s completely free since April 2024, and the debt limit was raised from £30,000 to £50,000 in June 2024. If you don’t own property and have very little disposable income, a DRO could clear your debts in just 12 months. Here’s how it works and whether you qualify.

What Is a Debt Relief Order?

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A Debt Relief Order (DRO) is a formal insolvency solution designed for people with low income, few assets, and no property. It’s managed by the Official Receiver, a government official, not a private company.

When your DRO is approved, you enter a 12-month moratorium period. During this time:

• All your qualifying debts are frozen
• Interest and charges stop immediately
• Creditors cannot contact you, take you to court, or send bailiffs
• You make no payments toward your debts

After 12 months, if your financial situation hasn’t significantly improved, all your qualifying debts are legally written off. Creditors can never chase those debts again.

DROs are available in England, Wales, and Northern Ireland. Scotland has a similar solution called the Minimal Asset Process (MAP), which we’ll cover later.

The 2024 reforms fundamentally changed DROs. The £90 application fee was abolished in April 2024, making it completely free. In June 2024, the debt limit increased from £30,000 to £50,000, and the vehicle exemption rose from £2,000 to £4,000. These changes have made DROs the most accessible debt solution in the UK.

In 2025, 46,939 people used a DRO to write off their debts. That’s 37% of all individual insolvencies in England and Wales, up 93% from 2022. The abolition of the £90 fee alone led to a 41% increase in applications in the first year.

Do You Qualify for a DRO?

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To qualify for a DRO, you must meet five strict criteria simultaneously. Fail any one of these, and your application will be refused.

1. Total Debts of £50,000 or Less

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Your total qualifying debts must not exceed £50,000. This includes the full balance on every debt, not just the arrears.

A “qualifying debt” is any liquidated sum you owe immediately or at a future date. This includes credit cards, loans, overdrafts, utility arrears, council tax arrears, and rent arrears.

2. Surplus Income of £75 Per Month or Less

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Your disposable income must be £75 or less after paying all your essential household expenses.

This calculation follows Standard Financial Statement (SFS) guidelines, which specify allowable spending caps for food, utilities, and housekeeping.

If you receive disability benefits like Personal Independence Payment (PIP) or Disability Living Allowance (DLA), these are neutralised in the calculation. They’re recorded as income but offset by equivalent care-related expenses, ensuring vulnerable people aren’t penalised.

3. Total Assets of £2,000 or Less

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Your total assets must not exceed £2,000. This excludes:

• One domestic vehicle worth under £4,000 (raised from £2,000 in June 2024)
• Basic household items like furniture, bedding, and clothing

4. You Do NOT Own Property

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Homeowners are almost universally excluded from DROs. Any legal or beneficial interest in property is counted at its gross value without deducting the mortgage.

Even if your property is in negative equity, it will typically disqualify you. The only exception is if the property’s total value is under £2,000, which is extremely rare in the UK market.

If you’re a homeowner struggling with debt, an IVA might be more suitable.

5. No DRO in the Past Six Years

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You cannot have had a DRO approved within the previous six years. If a previous DRO was revoked or cancelled due to improved circumstances, the six-year bar may not apply.

Vehicle Valuations

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For vehicles, you can use:

• A Parkers valuation (the most common method)
• Two independent valuations from reputable sources if a Parkers valuation isn’t available

The £4,000 vehicle exemption reflects the reality that reliable transportation is essential for employment and daily life.

You Must Live in England, Wales, or Northern Ireland

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You must currently live in England or Wales, or have lived or conducted business there within the three years before applying. Northern Ireland operates under a separate but similar framework, which also adopted the £50,000 limit and £0 fee in June 2024.

What Debts Does a DRO Cover?

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Not all debts are included in a DRO. It’s essential to understand which debts will be written off and which you’ll still owe.

Debts Included in a DRO (Written Off After 12 Months)

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These are “qualifying debts” that count toward the £50,000 threshold and are written off at the end of the moratorium:

• Credit cards and personal loans – Full balance written off
• Bank overdrafts – Your bank will usually close the account
• Store cards and catalogue debts – Including buy now, pay later agreements
• Payday loans – All short-term high-cost credit
• Utility arrears – Gas, electricity, and water arrears (you must continue paying current bills to maintain service)
• Council tax arrears – All arrears up to the application date
• Rent arrears – Arrears are written off, but your landlord retains possession rights and can still evict you for non-payment of current rent
• Benefit overpayments – Written off unless proven to be fraudulent
• Business debts – Debts incurred through trading
• Money owed to family and friends – If documented

Debts Excluded from a DRO (You Still Owe These)

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These debts must be paid in full. They don’t count toward the £50,000 threshold and aren’t frozen by the moratorium:

• Student loans – Specific legislative carve-out
• Court fines and criminal penalties – Public policy and justice system integrity
• Child support and maintenance – Prioritisation of family proceedings
• Social Fund loans – Government crisis and budgeting loans
• TV licence arrears – Statutory exclusion
• Personal injury damages – Compensation for death or injury

The Fraud Exception

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Debts incurred through fraud are handled differently. They count toward the £50,000 threshold, and the moratorium prevents collection during the 12 months. However, they’re not written off at the end. Once your DRO expires, the creditor can resume recovery action for the full amount.

Debts Incurred After Your DRO

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Any debts you incur after your DRO is granted are not included. You’re fully liable for all new credit and bills from the day your order is made.

How to Apply for a DRO

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You cannot apply for a DRO directly. You must use an approved intermediary working for a Competent Authority.

Step 1: Contact an Approved Intermediary

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Approved intermediaries work for organisations designated by the Secretary of State. These include:

• StepChange – Large-scale digital assessment and referrals
• Citizens Advice – Face-to-face and local support via accredited advisers
• National Debtline – Specialist distance advice and casework
• Shelter – Focus on debtors with complex housing and rent arrears
• AdviceUK – Network of independent advice centres
• Institute of Money Advisers – Professional body for debt advice specialists

Your intermediary acts as a gatekeeper. They verify your income, assets, and debts, and ensure you understand the long-term implications of insolvency.

Step 2: Gather Your Documents

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You’ll need to provide a comprehensive financial profile. Many applications fail at this stage due to lack of preparation.

Proof of income:

• Two months of recent payslips
• Benefit award letters
• Bank statements showing regular deposits

Debt inventory:

• Up-to-date balance statements for every creditor
• Use the full balance, not just the arrears

Asset valuations:

• Proof of value for any items worth over £2,000
• Vehicle valuations (Parkers or independent quotes)

Budgetary evidence:

• Breakdown of household spending showing surplus income below £75

Step 3: Online Submission and Official Receiver Review

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Once your intermediary is satisfied, they’ll submit your application through the Insolvency Service’s online portal.

The Official Receiver reviews the application, usually within a few days. They may:

• Approve the order
• Defer it for further investigation
• Refuse it if you’ve provided false information or committed “undervalue transactions” in the past two years

Step 4: Approval and Moratorium

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If approved, the 12-month moratorium begins immediately. You’ll receive confirmation, and your creditors will be notified that they must stop all collection activity.

The process from first contact with an intermediary to approval typically takes 2-4 weeks, depending on how quickly you can gather the required documents.

What Happens During the 12 Months?

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During the moratorium, creditors listed in your DRO have “no remedy” in respect of the debt.

What Creditors Cannot Do

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• Contact you for payment
• Start or continue legal proceedings
• Send bailiffs to your home
• Add interest or charges to the debt

What You Cannot Do

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You’re subject to strict restrictions during the moratorium:

• Borrowing limit: Cannot borrow more than £500 without disclosing your DRO status
• Company directorship: Cannot act as a company director without court permission
• Trading restrictions: Cannot trade under a different business name without disclosing the name used for your DRO

What You Must Do

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You must continue paying all ongoing obligations:

• Current rent – Not rent arrears, which are included in the DRO
• Current council tax – From the date your DRO is approved
• Utility bills – To maintain gas, electricity, and water services
• Any excluded debts – Student loans, court fines, child maintenance

If Your Circumstances Change

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If your financial situation improves significantly during the 12 months, you must inform the Official Receiver. This includes:

• Receiving an inheritance or lottery win
• Getting a substantial pay rise
• Acquiring assets that take you over the £2,000 limit

The Official Receiver may revoke your DRO if your circumstances improve to the point where you could afford to pay your debts.

Can Creditors Object?

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Yes. Creditors can object to your DRO during the moratorium if they believe you’ve been dishonest or your circumstances don’t warrant a DRO. The Official Receiver will investigate any objections.

What Happens After 12 Months?

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At the end of the 12-month period, one of two things happens:

1. Discharge and Write-Off (Most Common)

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If your financial situation hasn’t significantly improved, you’re discharged from all qualifying debts. This means:

• The debts are legally written off
• Creditors can never resume collection action for those specific balances
• You’re free to start rebuilding your financial life

2. Revocation (Less Common)

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If your circumstances improved significantly during the moratorium, the Official Receiver may have already revoked your DRO. In this case:

• All debts become payable immediately
• Interest and charges can be added back retroactively by creditors
• You’re returned to your original position

Revocation can also occur if:

• You were dishonest during the application process
• You broke the restrictions (e.g., borrowed over £500 without disclosure)
• You failed to inform the Official Receiver of improved circumstances

Can a DRO Be Revoked?

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A DRO is not “set in stone” until the 12-month moratorium is complete. The Official Receiver has discretion to revoke the order at any time during the moratorium.

Reasons for Revocation

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Improved circumstances:

• Substantial pay rise
• Inheritance or windfall
• Acquiring assets over the £2,000 limit

Dishonest conduct:

• Providing false information in your application
• Hiding assets or income
• Failing to disclose relevant financial information

Breach of restrictions:

• Borrowing over £500 without disclosing your DRO status
• Acting as a company director without court permission

The “Lookback Period”

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The Official Receiver examines the two years before your application for suspicious activity.

Transactions at undervalue: Giving away assets or selling them for less than their market value to reduce your asset total. For example, selling a £3,000 vehicle to a family member for £500 shortly before applying.

Preferential payments: Paying one qualifying creditor ahead of others, especially family and friends. Large lump sum payments within the two-year period are scrutinised. Regular contractual payments (like credit card minimums) are usually acceptable.

DRO Restriction Orders

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If your conduct was dishonest or blameworthy, the Official Receiver can apply for a DRO Restriction Order. This can last 2-15 years and imposes ongoing restrictions similar to bankruptcy restriction orders.

How Does a DRO Affect Your Credit?

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The “cost” of a DRO isn’t financial, but it does affect your credit file and public record.

Credit File Impact

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A DRO marker is placed on your credit report and remains for six years from the date of approval.

This marker indicates formal insolvency and will likely prevent you from:

• Accessing mainstream credit
• Getting a mortgage
• Securing certain employment roles, particularly in finance or law

After six years, the marker is removed, and you can begin rebuilding your credit.

The Individual Insolvency Register

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Every approved DRO is listed on the Individual Insolvency Register (IIR), a public database that anyone can search. The listing includes:

• Your name
• Your address
• Your date of birth

This information remains on the register for 15 months (the 12-month moratorium plus 3 additional months).

Bank Accounts

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Your bank may close your current account if they’re one of your creditors. It’s advisable to open a basic bank account with a non-creditor bank before applying for a DRO.

Employment

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Most employers won’t be affected by your DRO. However, certain professions have restrictions:

• Some finance sector roles
• Legal professions
• Positions requiring security clearance

Check your employment contract for any insolvency clauses before applying.

Other Implications

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British citizenship applications: A DRO may cause problems if you’re applying for British citizenship.

Power of attorney: If you hold power of attorney over someone else’s finances, this will end when your DRO is approved.

DRO vs Bankruptcy vs IVA — Which Is Right?

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Understanding the differences between these three insolvency solutions helps you choose the right one for your circumstances.

When a DRO Is Better Than Bankruptcy

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If you qualify for a DRO, it’s almost always better than bankruptcy:

• It’s free vs £680 for bankruptcy
• No monthly payments required
• Same 12-month moratorium concept
• Both have the same 6-year credit file marker

The only reasons to choose bankruptcy over a DRO are if:

• Your debts exceed £50,000
• Your assets exceed £2,000
• Your surplus income exceeds £75/month

When a DRO Is Better Than an IVA

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A DRO might be better than an IVA if:

• You have low or no income and can’t afford 5-6 years of payments
• Your debts are under £50,000 and you don’t own property
• You want to be debt-free in 12 months instead of 60-72 months

An IVA is better if:

• Your debts exceed £50,000
• You own property you want to protect
• You have surplus income over £75/month and can afford monthly payments
• You want to avoid the stigma of formal insolvency (though IVAs are also recorded)

For a detailed comparison, see our Bankruptcy vs IVA guide.

When You Shouldn’t Get a DRO

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A DRO isn’t suitable if:

• You own property, even if it’s in negative equity
• Your debts exceed £50,000
• You have surplus income over £75/month and could afford an IVA
• Your assets exceed £2,000
• You need to remain a company director
• You work in a profession where insolvency would end your career

In these cases, consider an IVA or speak to a debt adviser about other options.

Scotland — The Minimal Asset Process

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Scotland doesn’t have DROs. The equivalent is the Minimal Asset Process (MAP), part of the Scottish bankruptcy system.

MAP Eligibility

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• Maximum debt of £25,000
• Assets worth £2,000 or less (excluding one vehicle worth under £3,000)
• Disposable income of £75 or less
• Application fee of £50

MAP Process

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• Discharge in 6 months (faster than a DRO)
• No monthly payments
• Credit file marker for 6 years
• Similar restrictions to a DRO

If you live in Scotland, you can also consider a Trust Deed, which is the Scottish equivalent of an IVA.

Frequently Asked Questions

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How much does a DRO cost?

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It’s completely free. The £90 application fee was abolished in April 2024. There are no upfront costs and no hidden fees.

What is the maximum debt for a DRO?

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£50,000. This limit was raised from £30,000 in June 2024. Your total qualifying debts must not exceed this amount.

Can I keep my car with a DRO?

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Yes, if it’s worth under £4,000. This exemption was raised from £2,000 in June 2024. You can use a Parkers valuation or two independent valuations to prove your vehicle’s value.

Can I own a house and get a DRO?

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Almost certainly no. Any legal or beneficial interest in property is counted at its gross value without deducting the mortgage. Even properties in negative equity typically disqualify you.

How long does a DRO last?

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12 months. If your circumstances haven’t significantly improved by the end of the moratorium, all your qualifying debts are written off.

Can I apply for a DRO myself?

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No. You must use an approved intermediary working for a Competent Authority like StepChange, Citizens Advice, or National Debtline. They’ll verify your information and submit the application on your behalf.

What happens if I get a pay rise during my DRO?

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If your pay rise is significant enough to take your surplus income over £75/month, you must inform the Official Receiver. They may revoke your DRO, and all debts will become payable again.

Does a DRO affect my partner?

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No, unless you have joint debts. If you have joint debts, your partner will still be liable for the full amount. The DRO only protects you, not your co-borrowers.

Can I get a DRO if I’m self-employed?

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Yes, if you meet all the eligibility criteria. Your surplus income is calculated the same way, using your average monthly earnings after expenses.

How long does a DRO stay on my credit file?

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Six years from the date of approval. After six years, the marker is removed, and you can begin rebuilding your credit.

What debts aren’t included in a DRO?

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Student loans, court fines, child maintenance, Social Fund loans, TV licence arrears, and personal injury damages are excluded. You must continue paying these debts in full.

Can I get another DRO if this one is revoked?

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Yes, but you’ll have to wait six years from the date of the first DRO. If your first DRO was revoked rather than successfully completed, the six-year bar may not apply in some circumstances.

Get Advice on Your Debt Options

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If your debts are over £50,000, you own property, or you have surplus income over £75/month, a DRO won’t be suitable. But an IVA might be right for you.

An IVA protects your home, writes off a portion of your debt, and spreads affordable payments over 5-6 years. You could write off up to 70% of what you owe.

Use our free IVA calculator to check if you qualify in 2 minutes. It won’t affect your credit score, and there’s no obligation.

For more information on debt solutions, visit our debt help page or read about the pros and cons of an IVA.

If you have council tax arrears, these can be included in both a DRO and an IVA, depending on your circumstances.