What is a Debt Relief Order?

A Debt Relief Order is described by gov.uk as “a way of dealing with debts if you cannot afford them.” If you are granted a Debt Relief Order, you will enter a 12-month moratorium period, during which you are not required to make payments towards the debts included in the order. At the end of the 12 months, the debts covered by the order are written off, meaning you will no longer be legally required to repay them.

If your financial situation improves during the DRO period, the order may be revoked, meaning the protection ends and creditors may resume pursuing the debts. The Official Receiver oversees the DRO, and you are legally required to inform them of any significant change in your financial circumstances.

A Debt Relief Order is designed for people who are genuinely facing financial hardship. It should not be seen as an easy way out, as it carries serious repercussions — such as restrictions on specific financial activities and a six-year mark on your credit file. More on that below.

The Current Eligibility Criteria (Updated 2024)

It's important to note that the eligibility criteria for DROs changed significantly in 2024. The debt threshold was raised, and the administration fee was removed — making DROs accessible to far more people than before.

If you are struggling financially and cannot pay your debts, a Debt Relief Order could be helpful — but you must meet all of the following criteria:

• You owe £50,000 or less (raised from £30,000 in June 2024)
• You have lived or worked in England or Wales in the last three years
• You do not have enough money left at the end of each month to make your debt repayments (the surplus income threshold is £75 per month)​
• Your savings and valuables are not worth £2,000 or more in total
• Your vehicle, if you own one, would not generate £4,000 or more if sold today (raised from £2,000 in June 2024)
• You have not had a Debt Relief Order in the last six years

These changes were made because the previous thresholds left an increasing number of people without a viable way out of unmanageable debt — especially those who could not afford the £680 bankruptcy fee and did not qualify for the old DRO criteria.​

It is also important to note that if you are currently bankrupt, involved in bankruptcy proceedings, or engaged in any other formal insolvency proceedings, such as an Individual Voluntary Arrangement (IVA), you cannot apply for a Debt Relief Order.

If you've read the above criteria and feel you might be eligible, read on to find out more about the application process.

Finding an Approved Intermediary

To start the process, you'll need to find an "approved intermediary" — an authorised debt adviser. There is no cost for DRO applications, as the £90 administration fee was abolished from 6 April 2024. You will not have to pay anything to apply.

Approved intermediaries include organisations such as:

• StepChange Debt Charity
• National Debtline
• Citizens Advice Bureau (CAB)
• PayPlan

The debt adviser will ask you about your financial situation, including whether you have paid some creditors over the last two years but not others, and whether you have given away any assets or sold them for less than they were worth during that period.

Depending on how you have managed your debt during that time, your application may not be approved, as certain transactions can influence eligibility for a Debt Relief Order.

The Official Receiver Reviews Your Application

After you complete your application with the debt adviser, it will be sent to the Official Receiver. The Official Receiver will then review your financial affairs to fully understand your situation and decide whether the Debt Relief Order should be granted.

If your DRO is approved, the Official Receiver will inform you of what you can and cannot do during the 12-month moratorium period. They are also responsible for notifying your eligible creditors that they cannot ask you for payments during that time.

However, creditors can still send you statements and statutory notices, such as default notices. If any creditor contacts you requesting payment, you should inform them that you are subject to a Debt Relief Order.

During your DRO, you must be fully transparent about your financial situation. If your income rises — such as from a pay increase or other regular income — or if your financial position improves significantly, you are required to notify the Official Receiver. Failing to disclose relevant information may lead to the Debt Relief Order being revoked.

The Individual Insolvency Register

As part of the DRO process, you will be placed on a publicly accessible register called the Individual Insolvency Register. This is the same register used for people who have been declared bankrupt or are in an IVA. Your details remain on the register during the 12-month DRO period and are usually removed three months after the order ends, meaning they are typically visible on the register for around 15 months in total.

Similar to bankruptcy, being granted a DRO involves restrictions that may affect your daily life. It's crucial to consider these carefully before deciding whether to apply.

Debts That Can Be Covered

The following types of debt can be placed in a Debt Relief Order:

• Unsecured debts, including credit cards, overdrafts, and personal loans
• Money owed to friends and family, provided it is a genuine debt and not a gift (though this may cause serious damage to those relationships)
• Income tax arrears and certain other HMRC debts
• Council tax arrears
• Benefit overpayments
• Buy Now Pay Later (BNPL) debts
• Utility arrears (electricity, gas, phone)
• Rent arrears

Debts That Cannot Be Covered

As you might expect, not all debts can be included. You will still be required to keep paying the following, regardless of your DRO:

• Child maintenance or anything owed under family court proceedings
• Student loans
• Budgeting loans and crisis loans from the Social Fund
• Secured debts (debts secured against any of your assets)
• Criminal fines or damages for personal injury ordered by a court
• Unpaid TV Licence fines
• Any debts you incur after the DRO is granted

This last point is crucial. If you incur new debts while in a DRO, you risk serious consequences, including the DRO being revoked or further legal action, especially if you take on credit without informing the lender about your DRO.

The positive? Once your DRO ends, you will be formally discharged, and the debts included in the order will be legally written off.

A Debt Relief Order remains on your credit file for six years from the date it begins. This duration is consistent across all three UK credit reference agencies: Experian, Equifax, and TransUnion.

During those six years, you may find it difficult to obtain credit, open certain bank accounts or accounts with overdrafts, take out a mortgage, or even secure a mobile phone contract on favourable terms. Regarding its impact on future borrowing, a DRO sits in much the same category as bankruptcy.

After the six-year period, the DRO is automatically removed from your credit file.

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.