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What a DRO Is — and Why the 2024 Changes Matter
If unsecured debts have become unmanageable and income is low, a Debt Relief Order (DRO) is one of the formal insolvency routes available in England, Wales, and Northern Ireland. When a DRO is granted, creditors named in it cannot chase for payment, charge interest, or take enforcement action for 12 months. If the financial situation has not improved by the end of that period, the debts included in the order are written off entirely.
In June 2024, the government made the most significant changes to DRO rules since the scheme launched in 2009. The debt threshold was raised from £30,000 to £50,000, the asset limit was raised from £1,000 to £2,000 (the vehicle limit was separately raised from £1,000 to £4,000), and the £90 application fee was abolished entirely. According to GOV.UK, these changes were designed to make DROs accessible to a significantly wider group of people in problem debt.
The £90 DRO application fee was scrapped in June 2024. Applying through an approved intermediary now costs nothing, making this the only formal insolvency route in England and Wales with no upfront fee.
DRO Eligibility Criteria
A DRO is not available to everyone. The Insolvency Service sets out specific qualifying conditions, and all of them must be met at the point of application. Failing any single criterion means a DRO cannot be granted.
Debt Limits
Total qualifying debts must be £50,000 or less. This applies to unsecured debts — credit cards, personal loans, overdrafts, utility arrears, council tax arrears, benefit overpayments, and similar obligations. Secured debts such as mortgages are not included in the DRO but are also not written off by it.
Certain debts cannot be included in a DRO at all. According to GOV.UK, these include student loans, child maintenance arrears, magistrates' court fines, debts from fraud, and certain social fund loans. Anyone with these types of liability will still need to manage them separately even if a DRO is granted.
Asset Limits
Total assets must not exceed £2,000 in value — up from the previous £1,000 limit following the June 2024 rule changes. A single vehicle worth up to £4,000 is excluded from this calculation, meaning someone can own a car within that value and still qualify. A vehicle worth more than £4,000 would be counted as an asset and could take the total above the threshold.
A home is a significant asset. Someone who owns property — even with negative equity — is unlikely to meet the asset test for a DRO, and bankruptcy or another route may be more relevant in those cases. A regulated debt adviser can assess which formal route fits the full picture of assets and liabilities.
Income and Surplus
Monthly surplus income — what remains after paying reasonable household bills and living costs — must be £75 or less. This threshold is a hard eligibility condition: if surplus income is higher than £75 per month, a Debt Management Plan or Individual Voluntary Arrangement may be a more appropriate formal route, depending on the full circumstances involved.
Residency and Recent History
The applicant must have lived, had a place of business, or owned property in England, Wales, or Northern Ireland during the three years prior to applying. A DRO cannot be granted if someone has already had a DRO in the last six years, is currently bankrupt, or is subject to a Debt Relief Restrictions Order (DRRO).
To qualify for a DRO: debts of £50,000 or less, assets of £2,000 or less (excluding a vehicle up to £4,000), surplus income of £75 or less per month, and no DRO in the last six years.
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How the DRO Application Process Works
Unlike bankruptcy, a DRO cannot be applied for directly through the Insolvency Service. The application must be submitted by an approved intermediary — a qualified debt adviser authorised to complete the DRO application on behalf of the applicant. According to GOV.UK, approved intermediaries include advisers from Citizens Advice, National Debtline, StepChange, and other FCA-regulated or authorised debt advice organisations.
Step 1 — Speaking to an Approved Intermediary
The first step is making contact with an approved intermediary. They will carry out a full assessment of the financial situation, check that eligibility criteria are met, and explain what a DRO means in practice — including the restrictions it places on the applicant during the 12-month moratorium period. This stage is significant: if incorrect information is provided, the DRO can be revoked and a Debt Relief Restrictions Order issued, which extends the restrictions for up to 15 years.
Step 2 — Gathering Financial Information
The intermediary will need a complete and accurate picture of income, expenditure, debts, and assets. Documents typically needed include recent bank statements, payslips or benefit letters, details of all creditors and the amounts owed, and information about any vehicles or significant assets. Being thorough at this stage helps prevent delays or complications once the application is submitted.
Step 3 — Submission to the Insolvency Service
Once the intermediary is satisfied that the application is complete and eligibility is confirmed, they submit it electronically to the Insolvency Service. There is no longer any application fee. The Insolvency Service reviews the application and, if approved, issues the DRO. The 12-month moratorium begins on the date the DRO is made, not the date of application.
Step 4 — The 12-Month Moratorium
During the moratorium, creditors included in the DRO cannot take any enforcement action. Bailiffs cannot be instructed, county court judgments cannot be sought, and interest cannot be added to the debts. The applicant must comply with certain obligations during this period: they cannot obtain credit of more than £500 without disclosing the DRO, cannot act as a company director, and must inform the official receiver of any change in financial circumstances — for example, receiving an inheritance or a significant pay rise.
If the financial situation improves during the moratorium — for example, if surplus income rises above £75 per month — the official receiver may revoke the DRO. This is one reason why accurate information at the application stage is essential.
Step 5 — Discharge and Debt Write-Off
If circumstances have not changed materially by the end of the 12 months, the DRO is discharged automatically. All debts included in the order are written off at this point. The DRO will remain on the Individual Insolvency Register for three months after discharge, and on the applicant's credit file for six years from the date it was made.
A DRO stays on a credit file for six years from the date it is granted. This can affect the ability to obtain credit, mortgages, or certain types of employment during that period. Regulated debt advisers can explain the full implications before any application is made.
What a DRO Does Not Cover
A DRO does not resolve every type of financial obligation. As noted above, student loans, child maintenance payments, magistrates' court fines, and debts arising from fraud are excluded. Secured debts — such as mortgage arrears — are also not included, meaning any action by a secured lender can continue independently of the DRO.
Some people find that their situation involves a mix of includable and excluded debts. In those cases, the DRO may address a portion of the overall debt burden while other arrangements are needed for the remainder. An approved intermediary or FCA-regulated debt adviser can work through the specifics of what would and would not be covered in any individual situation.
DRO vs Other Formal Insolvency Routes
A DRO is specifically designed for people with low income and few assets. It differs from bankruptcy, which carries a £680 application fee (as of 2024), applies regardless of asset levels, and may involve the sale of assets by a trustee in bankruptcy. For people with higher incomes or significant assets, an Individual Voluntary Arrangement (IVA) — a formal agreement with creditors to repay a portion of debts over time — is another route that regulated advisers may discuss as relevant.
A Debt Management Plan (DMP) is not a formal insolvency route and does not write off debts — it is an informal arrangement to repay debts at a reduced monthly rate. For someone whose surplus income is above £75 per month and who does not qualify for a DRO on income grounds, a DMP may be one option worth understanding, though it does not provide the legal protections that a DRO offers.
The appropriate route for any individual depends on the full picture of their debts, income, assets, and personal circumstances. That assessment is something regulated debt advisers are authorised to carry out — it cannot be determined from a general factual overview alone.
Restrictions During a DRO
A DRO comes with legal obligations. During the 12-month moratorium, the applicant must not borrow more than £500 without telling the lender about the DRO. They cannot act as a director of a limited company, promote or manage a business under a different name without disclosing the DRO, or be involved in forming a new company. Breaching these restrictions is a criminal offence under insolvency legislation.
Anyone who has acted dishonestly — for example, by giving away assets before applying, running up debts without intention to repay, or failing to keep financial records — may be subject to a Debt Relief Restrictions Order (DRRO) or Debt Relief Restrictions Undertaking (DRRU), which extends these restrictions for between two and 15 years. According to GOV.UK, the Insolvency Service has powers to investigate conduct both before and after a DRO is granted.
Free Debt Advice — Where to Find It
Free, impartial debt advice is available from several regulated organisations. MoneyHelper (moneyhelper.org.uk) is a government-backed service offering free online tools and telephone guidance. StepChange Debt Charity provides free debt advice and can act as an approved DRO intermediary. Citizens Advice has trained advisers across England, Wales, and Northern Ireland who can assess DRO eligibility at no cost. National Debtline offers free telephone and online debt advice and also has approved DRO intermediaries available.
These organisations provide advice at no cost to the person seeking help. Engaging with a free advice service is one way to understand all available formal options clearly before any decisions are made.
Speak to a Regulated Debt Specialist
UK Debt Team is a debt advice referral service. For anyone who has read the information above and wants to explore whether a DRO or another formal route may be relevant to their situation, UK Debt Team can connect them with FCA-regulated debt specialists who are qualified to assess individual circumstances and explain the options available. UK Debt Team does not provide debt advice directly.