The 2026 thresholds explained
The Debt Relief Order thresholds were expanded in June 2024 and remain in place for 2026. The debt ceiling was raised from £30,000 to £50,000 and the vehicle exemption raised from £2,000 to £4,000. These changes brought many more households into the DRO route who previously would have needed bankruptcy or an IVA.
The core eligibility tests are: total qualifying unsecured debts of £50,000 or less, surplus income of £75 per month or less after reasonable living costs, total assets worth £2,000 or less (with the vehicle exclusion below), residence, work or business in England or Wales for the last three years.
You must also not have had a DRO in the last six years, must not be currently subject to bankruptcy or an IVA, and must not be a company director if the company is trading.
How assets are counted
The £2,000 asset limit sounds small but there are important exclusions. A single vehicle worth up to £4,000 is excluded entirely, provided the vehicle is used for essential purposes (getting to work, transporting a disabled family member, etc). If the vehicle is worth more than £4,000, the full value counts.
Household goods that are reasonable for domestic needs — furniture, appliances, clothing, personal effects — are excluded from the £2,000 calculation regardless of value.
Tools of the trade used personally in your work or business, up to a reasonable amount, are also excluded.
Savings, investments, pension contributions in excess of what is reasonable, and any second vehicle all count towards the £2,000 limit.
The surplus income test
Your surplus income is your income minus your reasonable monthly outgoings. Outgoings are assessed using the DRO Guidance for Intermediaries — a specific set of allowances the Official Receiver uses to test cases.
Reasonable outgoings include rent or mortgage, council tax, utilities, food, travel, childcare, insurance, phone and internet, clothing, personal costs, and other regular commitments. The DRO guidance sets specific figures for household size and situation.
If your surplus is £75.01 or above per month, you do not qualify for a DRO. Even a small excess is enough to fail the test. This is one of the most common reasons DRO applications are rejected.
The three-year residency test
You must have lived, worked or run a business in England or Wales at some point in the last three years. This does not have to be your entire residency period — even a period of work in England or Wales in the last three years can satisfy the test.
People from Scotland cannot apply for a DRO. Scotland has its own equivalent low-income insolvency route (Minimal Asset Process — MAP) which is broadly similar in purpose.
People from Northern Ireland have their own DRO equivalent. The rules and thresholds are similar but administered separately.
The one-in-six-years rule
You cannot get a DRO if you have had one in the last six years. This is measured from the start of the previous DRO, not the end.
If you have had bankruptcy in the last six years, you can still get a DRO — the six-year restriction only applies to previous DROs.
If you have had an IVA that completed or failed in the last six years, you can still get a DRO.