We’ll Help You Communicate with Creditors
Need help dealing with creditor letters or emails? We’ve got your back. Book your free 10-minute Discovery Call, and let’s keep things simple.
What Is a Debt Relief Order (DRO) and Is It Right for You?
Not many people know what a Debt Relief Order (DRO) is, which some may see as problematic because it can be a real lifeline for those who need it. This alternative usually receives less attention than an Individual Voluntary Arrangement (IVA), despite often being a simpler and less disruptive way to escape significant debt. However, it's crucial to understand that both options carry serious financial implications if you choose to pursue them.
Hold on a moment!
This page provides a brief overview of Debt Relief Orders. For complete details and a thorough understanding, read our article 'What Is a Debt Relief Order (DRO) and How Does It Affect You?' or scroll down to the purple box at the bottom of the page.
What Is a Debt Relief Order (DRO)?
In simple terms, a DRO is a way to manage your debts if you're finding it hard to pay them. Once approved, you won't have to make any payments towards the debts included in the DRO for 12 months. After that period, the remaining debt is completely written off.
That is the simplified version. As you might expect, there are conditions attached. There are specific eligibility criteria you need to meet — and some important restrictions to be aware of if you’re granted a DRO.
DRO Eligibility Criteria (Updated for 2024–2026)
Following the changes announced in the 2024 Spring Budget and implemented in April and June 2024, the eligibility thresholds were significantly expanded, making DROs accessible to many more people. Here's what you currently need to qualify in England and Wales:
- Total debt of up to £50,000 (raised from £30,000 in June 2024)
- £75 or less in spare income per month after paying your usual household expenses
- Assets worth no more than £2,000 in total (excluding basic household items and tools needed for your job)
- A vehicle worth no more than £4,000 (raised from £2,000 in June 2024)
- No application fee — the £90 administration fee was abolished in April 2024
- You must not have assets (including any interest in a property) that take you over the eligibility limits
- You have lived or worked in England or Wales in the last three years
- You have not had a DRO in the last six years
- You are not currently bankrupt, in an IVA, or subject to an interim order
These changes matter. In 2024–25, the number of DROs granted rose by 41% to 45,917, up from 32,514 the previous year, mainly due to the removal of the fee and the expanded debt threshold.
What Restrictions Come With a DRO?
A DRO is not a decision to be taken lightly. Once in place, you face real restrictions that impact your day-to-day life:
- You cannot manage a business or act as a company director without court permission
- You are placed on the Individual Insolvency Register, which anyone can search
- You cannot borrow more than £500 without disclosing that you are in a DRO
- In most cases, the DRO lasts for 12 months, but it can be revoked if your circumstances change, if you fail to follow the rules, or if you've behaved dishonestly
- Not all debts can be included — for example, student loans, child maintenance arrears, and most court fines are excluded. Benefit overpayments are generally included, but if they resulted from fraud, they won’t be written off when the DRO concludes.
Before You Consider a DRO — Have You Checked This First?
Before considering any formal debt solution, your first step should always be to check if your debt is Statute Barred. If your debt is more than six years old, you haven't made any payments towards it, haven't acknowledged it in writing, and it hasn't gone to court — it may be statute barred. This could mean the entire debt is unenforceable, and in many cases can be addressed with a simple letter.
My Debt Is Not Statute Barred — What Are My Alternatives to a DRO?
If your debt isn't statute barred and you've fully understood what a DRO involves — including the potential impacts on your credit file, your business, and your daily life — it's time to consider whether there are less extreme alternatives that might suit your situation better.
Token Payments and Unsecured Debt Options
If your debts are unsecured — such as credit cards, personal loans, overdrafts, and payday loans — you have more options than you might realise. Under the Financial Conduct Authority (FCA) Handbook (CONC), creditors are expected to treat customers experiencing financial difficulty with forbearance, which may include accepting reduced or token payments based on affordability. This helps keep creditors informed of your intentions while protecting you during a challenging period.
That's just one option. We've reviewed a complete range of approaches to managing unsecured debt in our 'I need help with debt' section, covering the pros and cons of each without any creditor or debt collector bias. The key point is this: for many people with unsecured debts, it is possible to handle your situation without ever resorting to insolvency.
Important reads
Why Insolvency Should Always Be a Last Resort
Any form of insolvency, including Debt Relief Orders, should never be entered into lightly. The impact on your credit file, your ability to borrow, and your everyday financial life can be significant. If those consequences aren't fully understood before you commit, they can be a sudden and unwelcome shock.
At The Real Debt Guy, we're never here to make decisions for you. We're here to ensure there are no gaps in the information you're receiving before you make that decision. Knowing all the options and which one fits your specific situation is the difference between a decision you feel confident about and one you later regret.
TRDG has your back.