How a debt relief order works

What is a debt relief order?

A debt relief order (DRO) is an order made by the official receiver that freezes the qualifying debts listed in it for one year (opens in a new tab) and then discharges them (opens in a new tab), including the interest. It is one of the debt solutions available in England and Wales, meant for people who cannot pay their debts and have very little money or property that could go towards them.

During the 12 months you stop paying the debts in the order, and the creditors listed in it cannot ask you for payment. You still pay your rent, your bills and any debts the order cannot include.

We cannot apply for a DRO for you or act on one. Only an approved debt adviser can make the application, so this page explains how a DRO works and where to get that free help.

Who qualifies for a debt relief order?

You may qualify for a debt relief order if your qualifying debts are not more than £50,000, your surplus income is not more than £75 a month and your property is worth not more than £2,000, ignoring one vehicle worth less than £4,000, and you also need a connection to England and Wales and no DRO in the last six years. The conditions are in Schedule 4ZA of the Insolvency Act 1986 (opens in a new tab), which treats each figure as a maximum you must not go over; GOV.UK describes the same limits as "less than".

• Total debts of no more than £50,000, the limit for applications made on or after 28 June 2024 (opens in a new tab) (it was £30,000 before).
• Spare income of no more than £75 a month and property worth no more than £2,000, both set from 29 June 2021 (opens in a new tab).
• One vehicle worth less than £4,000 is ignored when your property is valued (the limit was £2,000 before 28 June 2024), and a vehicle specially adapted for a disability is ignored up to the cost of a reasonable replacement.
• You are not an undischarged bankrupt, in an IVA or under an interim order, and you are not subject to a bankruptcy or debt relief restrictions order.
• You have not had a DRO in the last 6 years.
• You have not paid one creditor ahead of the others, or given away or sold something valuable for less than it was worth, in the last 2 years. A debt adviser checks both.

How do I apply for a debt relief order?

You apply for a debt relief order through an approved intermediary, a debt adviser authorised to submit applications to the official receiver, and there has been no fee since 6 April 2024, when the £90 fee was abolished (opens in a new tab). GOV.UK is clear (opens in a new tab) that "You cannot complete the application on your own", and the adviser checks whether you qualify free of charge. We are not an approved intermediary. You do not go to court.

GOV.UK names organisations that help people get a DRO, including National Debtline, Citizens Advice and PayPlan. If a DRO does not suit you, the adviser can help you find another way to deal with your debts.

What happens during and after a DRO?

A debt relief order normally ends after 12 months (opens in a new tab), when the qualifying debts in it are written off, and it is removed from the Individual Insolvency Register three months later. During those 12 months you stop paying the debts listed in it and follow a set of restrictions, and GOV.UK says (opens in a new tab) that at the end "you will not have to pay your debts back". The period can be extended in some cases, and the order can be cancelled if your circumstances change.

A DRO shows on your credit reference file for 6 years from the date it was approved, which GOV.UK describes as the standard period for debt relief options. Keep your paperwork: you may need to show that the DRO has ended when you apply for credit or update your credit file.

You must tell the Insolvency Service if your income goes up or you receive money or property during the 12 months, because it will reassess the order.

What if I do not qualify for a DRO?

If you do not qualify for a DRO, the other ways to deal with debt you cannot pay are bankruptcy, which costs £680 to apply for, an IVA if you have a regular income to pay from, or a debt management plan if you can repay in full over time. Owing more than £50,000, owning your home or having more than £75 a month to spare will each rule a DRO out.

A free debt adviser can compare these with you. James Kaye and Nick Morgan, our licensed insolvency practitioners, can advise you on bankruptcy or an IVA; fees apply to an IVA.

What restrictions come with a debt relief order?

While a debt relief order is in force you must not obtain credit of £500 or more without telling the lender about the DRO, act as a company director without the court's permission, or trade under a different name without disclosing the DRO. The credit limit follows the law, which makes it an offence to obtain credit of £500 or more without saying so; GOV.UK describes it as borrowing more than £500.

Breaking the restrictions can lead to prosecution, and they can be extended for 2 to 15 years by a debt relief restrictions order, which creditors can also ask the Insolvency Service to seek if they believe you acted dishonestly or made your debts worse before applying. While the DRO lasts you also cannot:

• create, manage or promote a company without the court's permission
• open a bank account or apply for an overdraft without telling the bank or building society
• apply for another DRO for 6 years from the date this one was approved

Can I keep my bank account with a debt relief order?

A debt relief order might affect your bank account, depending on your bank's policies: an account can be frozen, and whether you can keep using it is the bank's decision. You can open a new account, but you must tell the bank about your DRO when you apply for a new account or an overdraft.

The Insolvency Service's guidance for debt advisers (opens in a new tab) says ongoing use of an account "is a commercial decision for the bank or building society", and that showing the bank the DRO might help you withdraw money held in a frozen account.

Is a debt relief order a good idea?

A debt relief order can suit people with low income and few assets because there has been no fee since 6 April 2024 and it lasts 12 months, but it brings credit restrictions and is only available through an approved intermediary. It also stays on your credit file for 6 years.

Whether it suits you depends on your debts, income and property, which is why an approved debt adviser checks the conditions with you, free of charge, before applying. MoneyHelper and GOV.UK's debt advice page list free, independent services that can do this.

Is a debt relief order better than an IVA?

A debt relief order is not better or worse than an IVA in general: a DRO suits people within the £50,000, £75 and £2,000 limits, while an IVA suits people with a regular surplus income to pay over five to six years (opens in a new tab). A DRO costs nothing and lasts 12 months; an IVA carries fees and needs a monthly payment.

GOV.UK's IVA key facts say an IVA may not be the best solution if you can only afford a small payment each month or your income is mainly benefits. Our guide to how an IVA works sets out its fees, risks and length; fees apply to an IVA.