DRO Eligibility: Do You Qualify for Debt Relief Orders? – September 2026

Struggling with debt but don’t own property or have significant assets? A Debt Relief Order could be more suitable than an IVA. In this comprehensive guide, we’ll explore whether you qualify for a Debt Relief Order (DRO), the process involved, and the benefits it offers for low-income individuals in England and Wales. We’ll also compare it with other debt solutions like Individual Voluntary Arrangements (IVA), bankruptcy, and Debt Management Plans (DMPs) to help you determine if a DRO is the right choice for you.

Understanding Debt Relief Orders (DROs)

A Debt Relief Order is a formal debt solution available to individuals in England and Wales who are struggling with debt and meet certain eligibility criteria. It’s designed for those with minimal assets and low income. If you’re eligible, a DRO can offer you a fresh start by writing off most of your debts after a 12-month period. Let’s delve deeper into the eligibility criteria and the process of applying for a DRO.

DRO Eligibility Criteria

To qualify for a Debt Relief Order, you must meet specific criteria:

• Debt Limit: Your total debts must not exceed £50,000.
• Spare Income: You must have less than £75 spare income per month.
• Assets: Your assets must not be worth more than £2,000.
• Vehicle Ownership: You must not own a vehicle worth £4,000 or more.
• Homeownership: You cannot own your home.
• Previous DROs: You cannot have had a DRO in the last six years.

The DRO Application Process

Applying for a DRO involves a few essential steps:

1. Contact an Approved Debt Adviser: You cannot apply for a DRO on your own. Reach out to an approved debt adviser, who will assess your financial situation and help determine if a DRO is suitable for you.
2. Provide Necessary Information: Your adviser will require information about your debts, income, expenses, and assets. Be prepared to provide accurate and complete details to ensure the process goes smoothly.
3. DRO Application Submission: Once your adviser confirms your eligibility, they will submit your application to the Insolvency Service.
4. Moratorium Period: If approved, your DRO lasts for 12 months. During this time, creditors cannot take any action against you, and you are not required to make payments toward the debts included in the DRO.
5. Debt Discharge: At the end of the 12-month period, if your situation hasn’t changed, the debts included in the DRO are written off.

It’s important to note that any change in your financial situation during the moratorium period, such as receiving a windfall, must be reported to your adviser, as it may affect your DRO.

Common Mistakes to Avoid

When considering a DRO, be mindful of the following pitfalls:

• Inaccurate Information: Providing incomplete or incorrect information can lead to application delays or rejections.
• Ignoring Changes: Failing to report changes in your financial circumstances during the moratorium period can result in the revocation of your DRO.
• Not Seeking Advice: Always consult with an approved debt adviser to explore all your options and ensure a DRO is the best solution for your situation.

Benefits and Drawbacks of a DRO

Advantages of a DRO

A Debt Relief Order can offer several benefits, including:

• Debt Relief: After the 12-month period, your qualifying debts are written off, giving you a clean slate.
• Protection from Creditors: During the moratorium period, creditors cannot pursue legal action against you for the debts included in the DRO.
• Cost-Effective: With the abolition of the £90 application fee in June 2024, applying for a DRO is now free.

Potential Downsides of a DRO

While a DRO can be beneficial, it’s important to consider its limitations:

• Credit Impact: A DRO will remain on your credit file for six years, impacting your ability to obtain credit during this time.
• Asset Restrictions: You must adhere to strict asset limits, which may not be suitable if you have valuable assets.
• Eligibility Constraints: Not everyone qualifies for a DRO, and you may need to explore alternative solutions if you don’t meet the criteria.

Comparing DROs with Other Debt Solutions

Debt Relief Order vs. Individual Voluntary Arrangement (IVA)

While both DROs and IVAs are formal debt solutions, they serve different needs:

• IVA: Typically lasts five years (or six if home equity is involved) and requires 75% creditor approval by value. You pay from within your monthly payments.
• DRO: Suitable for those with minimal surplus income and assets, with debts written off after 12 months.

Debt Relief Order vs. Bankruptcy

Bankruptcy is another option for those struggling with debt but has different implications:

• Bankruptcy Cost: The fee is £680, and your home and other significant assets may be at risk.
• DRO Cost: Free to apply, with asset protection up to £2,000 in value and a vehicle worth less than £4,000.

Debt Relief Order vs. Debt Management Plan (DMP)

DMPs offer a more informal approach:

• DMP: Not legally binding, and creditors are not obligated to freeze interest or accept reduced payments. You repay all your debts.
• DRO: Legally binding, with debts written off after 12 months if conditions are met.

Debt Relief Order and Breathing Space

Breathing Space provides temporary relief but is not a debt solution:

• Breathing Space: Offers 60 days of protection from creditor action, but you must apply through a debt adviser.
• DRO: Offers long-term relief by writing off debts after 12 months.

Not Sure Which Debt Solution Is Right for You?

Every debt situation is different. The right solution depends on your income, your debts, and what you own. Our solution finder takes a few minutes and helps point you in the right direction.