What is a Debt Relief Order (DRO)?
A Debt Relief Order is a formal, legally binding debt solution available in England, Wales, and Northern Ireland. Introduced in 2009 under the Tribunals, Courts and Enforcement Act 2007, it was designed specifically for people with low income, minimal assets, and debts they simply cannot afford to repay — but for whom bankruptcy is unnecessarily complex or costly.
A DRO works in two stages. First, a 12-month moratorium period begins on the day the order is approved. During this time, all qualifying debts are frozen, all interest and charges stop accruing, and creditors are legally prohibited from taking any enforcement action against you. At the end of that 12-month period, if your financial circumstances have not materially improved, every qualifying debt included in the DRO is legally written off in full.
The DRO is administered by the Insolvency Service through an Official Receiver — not through the courts. This makes it simpler, faster, and less costly than bankruptcy while offering the same debt write-off outcome for those who qualify.
April 2024: The £90 application fee was permanently abolished — a DRO is now completely free. June 2024: The qualifying debt threshold was raised from £30,000 to £50,000, and the vehicle allowance increased from £2,000 to £4,000. These changes mean thousands more people across the UK are now eligible.
A DRO application must be submitted through an approved intermediary — a qualified debt adviser who guides you through the process at no cost.
Who is a DRO designed for?
A DRO sits between a Debt Management Plan (which involves no debt write-off) and Bankruptcy (which involves a £680 court fee and more complex asset rules). It is specifically designed for people who:
- Have low or benefits-based income with little surplus each month
- Do not own property or have significant assets
- Have total unsecured debts under £50,000
- Cannot realistically repay their debts within a reasonable timeframe
- Cannot afford the cost of bankruptcy
DRO eligibility criteria — do you qualify?
To be approved for a DRO, you must meet all of the following conditions simultaneously. If you do not meet even one criterion, you will not qualify. Your approved intermediary will assess every condition carefully before submitting your application.
Additionally, you must not currently be in another formal insolvency arrangement (IVA, bankruptcy, or another DRO), and you must not have had a DRO in the previous six years.
Transactions in the past 2 years: The Official Receiver will scrutinise any financial transactions you made in the two years before applying — particularly gifts, asset sales at below market value, or preferential payments to one creditor over others. These can result in your DRO being refused or revoked. Always disclose everything accurately.
What counts as income for DRO purposes?
Most regular income sources are counted when assessing your monthly surplus, including employment wages, self-employment income, and most state benefits. However, certain disability-related benefits such as Personal Independence Payment (PIP) and Disability Living Allowance (DLA) can be offset against associated care or mobility costs — potentially reducing your counted surplus. An approved intermediary will work through this calculation carefully with you.
How does a DRO work? The step-by-step process
Unlike bankruptcy, a DRO does not involve a court hearing. It is an administrative process managed by the Insolvency Service. Most applications are approved within a few days of submission. Here is exactly what you can expect from first contact to debt write-off.
Contact an approved DRO intermediary
You cannot apply for a DRO yourself directly — applications must be submitted by an approved DRO intermediary. These are qualified debt advisers authorised by the Insolvency Service. Free services are available through Citizens Advice, StepChange, National Debtline, and other charities. The entire process is completely free.
Full financial assessment
Your intermediary will carry out a thorough review of your income, monthly outgoings, total debts, and assets. You will need to provide bank statements (typically three months), details of any income, and a complete list of every creditor you owe. This assessment determines whether you meet all eligibility criteria.
All qualifying debts must be listed
Unlike a DMP or IVA, you cannot pick and choose which debts to include in a DRO. Every qualifying debt must be declared. Debts omitted from the application cannot be added later, and if undisclosed debts would have taken you over the £50,000 threshold, your DRO could be refused or revoked by the Official Receiver.
Intermediary submits your application
Once satisfied that you meet all criteria, your intermediary submits your DRO application online to the Insolvency Service. There is no application fee. The Official Receiver reviews the application, typically within a few days. If they need additional information, they will contact your intermediary directly.
DRO approved — moratorium begins
Once approved, the DRO is registered on the Individual Insolvency Register and your credit file is updated. All creditors listed in the DRO are notified. From that day, creditors cannot contact you about those debts, cannot add interest or charges, and cannot take any legal enforcement action — including sending bailiffs. The 12-month moratorium clock starts immediately.
Report any changes during the moratorium
During the 12 months, you must report any significant change in your circumstances to the Insolvency Service — including a pay rise, inheritance, new employment, a windfall, or a change of address. The Official Receiver can revoke your DRO if your situation improves to the point where you no longer qualify. Failing to report changes can result in criminal prosecution.
DRO completes — all qualifying debts written off
If your financial circumstances have not materially improved during the 12-month period, all qualifying debts included in the DRO are automatically discharged — you owe your creditors nothing. The DRO entry is removed from the Insolvency Register, though it remains on your credit file for six years from the date the DRO started.
For many people, DRO approval provides immediate relief — creditor contact stops, interest freezes, and there is a clear 12-month path to a complete fresh start.
What debts are included — and excluded — in a DRO?
A DRO covers most common forms of unsecured debt, but a number of debt types are specifically excluded by law. Understanding which debts are covered is critical — excluded debts must still be paid even after the DRO completes.
Written off on completion
- Credit card balances
- Personal loans and payday loans
- Bank overdrafts
- Utility bill arrears
- Council tax arrears
- Rent arrears (eviction risk remains)
- Benefit overpayments (most)
- Catalogue and store card debts
- Money owed to friends or family
Must still be repaid
- Student loans
- Child maintenance arrears
- Magistrates court fines
- TV licence arrears
- Mortgages and secured loans
- Debts incurred through fraud
- Criminal confiscation orders
- Social fund loans
- Personal injury compensation owed to others
Rent arrears: Although rent arrears can be listed in a DRO, your landlord retains the right to pursue eviction through the courts for those arrears — the DRO does not prevent this. Always continue paying your ongoing rent throughout the DRO period to protect your tenancy.
Advantages and disadvantages of a DRO
A DRO is one of the most powerful debt solutions available for people with low income and minimal assets — but it has strict conditions and lasting consequences you must understand before applying.
Advantages
- Completely free to apply — no fees at any stage since April 2024
- All qualifying debts legally written off after just 12 months
- Immediate legal moratorium — creditors cannot contact you or enforce debts
- All interest and charges on listed debts frozen immediately on approval
- No monthly payments required during the DRO period
- Simpler and cheaper than bankruptcy (£680 court fee vs £0 for DRO)
- No court hearing required — entirely administrative process
- You can keep a vehicle worth up to £4,000
- Applied for through free debt charity services (StepChange, Citizens Advice)
- Accessible to people on benefits who cannot use other solutions
Disadvantages
- Strict eligibility — not suitable for homeowners or those with higher income
- Recorded on your credit file for six years from the start date
- Listed on the public Individual Insolvency Register
- Cannot obtain credit of more than £500 without disclosing the DRO
- Company directors are automatically disqualified during the moratorium
- Some professional or regulated roles may be affected — check your contract
- DRO can be revoked if circumstances improve significantly during the 12 months
- Cannot have had a previous DRO within the past six years
- All qualifying debts must be declared — you cannot omit any creditor
- Some debts (student loans, fines, child maintenance) cannot be written off
Speaking to an approved intermediary is the essential first step — they assess your full situation and confirm whether a DRO is the most appropriate solution for you.
DRO restrictions — what you cannot do during the moratorium
While your DRO is active, you are subject to a set of legal restrictions. Breaching any of these restrictions without reasonable excuse is a criminal offence that can result in your DRO being revoked, extended, or in prosecution.
Credit and borrowing
You must not obtain credit of more than £500 from any lender — individually or jointly with another person — without first disclosing that you are currently subject to a DRO. Most mainstream lenders will decline any credit application during this period. Failing to disclose is a criminal offence.
Business and company activities
- Company directors: You are automatically disqualified from acting as a company director during the moratorium. You cannot promote, manage, or be involved in forming a limited company without the court's permission.
- Business name: You cannot carry on business under a name different from the one under which the DRO was made without disclosing your DRO name to anyone you do business with.
- Self-employment: You can generally continue trading as a sole trader, but you must disclose the DRO in business dealings where required.
Employment implications
Most people are not affected professionally by a DRO. However, certain roles carry specific restrictions that may be triggered:
- Financial services professionals (some FCA-regulated roles) should review their employment terms
- Police officers should check their force's specific policy on debt arrangements
- Employees of certain security-sensitive organisations (e.g. Nuclear Decommissioning Authority) should seek guidance before applying
- Some professional body memberships (solicitors, accountants) may require disclosure to the relevant body
Windfalls and income changes
If you receive a windfall — such as an inheritance, lottery win, insurance payout, or settlement — or if your income increases significantly during the 12 months, you must notify the Insolvency Service immediately. They will assess whether your circumstances have improved enough to revoke the DRO. The same applies if you move house, change jobs, or experience any other significant financial change.
What happens if a DRO is revoked? If the Official Receiver revokes your DRO — because your circumstances improved, you failed to report a change, or you provided inaccurate information — all listed creditors can immediately resume their enforcement activity. The debts are not written off and you remain fully liable for them. Revocation can also result in a Debt Relief Restrictions Order (DRRO) which extends restrictions for 2 to 15 years. Always be completely transparent throughout the process.
How does a DRO affect your credit score?
A DRO has a significant and lasting impact on your credit profile — but for many people considering a DRO, their credit score is already severely damaged by months or years of missed payments, defaults, and creditor pressure. The DRO provides a structured end point and marks the beginning of a recovery path.
On the day the DRO is approved
All three main UK credit reference agencies — Experian, Equifax, and TransUnion — are notified of your DRO. The entry is added to your credit file and to the Individual Insolvency Register, which is publicly searchable. Your credit score will typically fall further on the day of approval, even if it was already significantly damaged.
During the 12-month moratorium
- Obtaining new credit, a mortgage, or additional financial products will be extremely difficult or impossible
- Basic bank accounts (sometimes called ‘foundation’ accounts) are usually still available even during an active DRO
- Landlords and employers may find the DRO entry if they check the Insolvency Register
- The debts listed in the DRO will show as included in the arrangement on your credit file
After the DRO completes
- The DRO entry is removed from the Individual Insolvency Register once the 12-month moratorium ends
- The record remains on your credit file for six years from the date the DRO started — not from when it completed. This means only five years remain on your file after completion
- After the six-year period, the entry is fully removed from your credit file and most lenders cannot see it
- Many people begin rebuilding their credit within the first year after their DRO ends, using secured credit cards or credit-building products designed for people with adverse credit histories
The bigger picture: If you are already missing payments and accumulating defaults, your credit score is almost certainly already seriously damaged — and that damage is already happening. For many people, a DRO provides no additional credit damage beyond what has already occurred, while delivering a legally enforced clean break. The six-year clock on the credit file starts on day one of the DRO, meaning every month of the moratorium is also counting down toward full recovery.
DRO vs Bankruptcy — and other alternatives
A DRO is not the only solution for people who cannot repay their debts. Understanding how it compares to the alternatives helps you make the right decision for your specific circumstances. A regulated adviser can confirm which option is most appropriate.
| Solution | Cost | Debt written off | Duration | Best suited for |
|---|---|---|---|---|
| DRO | Free | Yes — after 12 months | 12 months | Low income, no property, debts under £50k |
| Bankruptcy | £680 fee | Yes — after 12 months | 12 months | Larger debts, assets to surrender, higher earners |
| IVA | IP fees (~£3,650) | Yes — remaining balance | 5–6 years | Regular income, multiple creditors, £6k+ debt |
| DMP | Free (charities) | No — full repayment | Flexible | Homeowners, flexible needs, lower debt levels |
When bankruptcy may be more appropriate than a DRO
Bankruptcy may be a better fit if your total debts exceed £50,000, if you own property or significant assets, if you have a higher income, or if you need to deal with complex financial affairs such as business debts. The key disadvantage of bankruptcy is the £680 application fee, which is precisely why the DRO was created — to provide an equivalent outcome for people who cannot afford that cost.