DRO Income Limits: Can You Afford a Debt Relief Order? – July 2026

Many people assume they can’t get a DRO because they have some assets or income. The reality might surprise you. Understanding whether you qualify for a Debt Relief Order (DRO) is crucial in managing your financial situation effectively. This guide will help you navigate the criteria and limits for a DRO, ensuring you make informed decisions about your debt relief options.

Understanding Debt Relief Orders: Are You Eligible?

A Debt Relief Order (DRO) is often seen as a lifeline for those struggling with debt. It offers a way to write off debts after a 12-month moratorium period, provided you meet certain criteria. But what exactly do you need to qualify for a DRO in England and Wales?

Criteria for a DRO

To be eligible for a DRO, you must meet the following criteria:

• Your total debt must not exceed £50,000.
• You must have less than £75 spare income each month.
• Your assets must be valued at less than £2,000.
• You cannot own a vehicle worth £4,000 or more.
• You cannot be a homeowner.
• You must not have had a DRO in the last 6 years.

These criteria ensure that DROs are targeted at individuals who genuinely need financial assistance and have no realistic way of paying off their debt. It’s important to consider how each criterion applies to your specific circumstances. For example, if your debts are slightly above the £50,000 limit, you may need to explore other debt solutions.

Application Process: Step-by-Step

1. Consult a Debt Adviser: You cannot apply for a DRO on your own. An approved debt adviser will assess your situation and submit the application on your behalf. This step is crucial, as advisers are trained to understand your financial situation and can guide you through the process.
2. Provide Accurate Financial Information: Be prepared to disclose all your debts, income, and assets. Accurate information is vital to ensure your application is successful. If you forget to mention certain assets or income, it could affect your eligibility or even lead to the revocation of your DRO.
3. Application Submission: Your adviser will submit the application to the Insolvency Service, who will review and approve it if you meet all the criteria. The review process is thorough, ensuring that only those who qualify receive the benefits of a DRO.
4. Moratorium Period: If approved, you enter a 12-month moratorium period where you are protected from creditors. During this time, you are not required to make payments towards the debts included in the DRO.
5. Debts Written Off: After the 12 months, if your situation hasn’t changed, your debts will be written off. This can provide significant relief and a fresh start for those who have struggled with unmanageable debt.

Income and Asset Limits: What You Need to Know

Understanding the income and asset limits for a DRO is critical. These limits ensure that DROs are reserved for those in genuine need of relief.

Income Limits

Your disposable income must be less than £75 per month. This means that after covering essential living expenses, you should have no more than £75 left. It’s important to budget accurately and honestly, as this determines your eligibility. For instance, if your monthly income is £1,500 and your essential expenses such as rent, utilities, and groceries amount to £1,425, you would qualify based on the income criterion.

Asset Limits

Your assets must be valued under £2,000. This includes cash savings, investments, and valuable items. However, necessary household items and clothing are not counted as assets. Additionally, if you own a vehicle, it must be worth less than £4,000. Consider an example: if you have a car valued at £3,500 and personal belongings worth £400, you would meet the asset criteria for a DRO.

Alternative Debt Solutions: Weighing Your Options

If a DRO isn’t suitable, other options may be available to you, such as an Individual Voluntary Arrangement (IVA), bankruptcy, or a Debt Management Plan (DMP). Each has its own criteria and implications, so it’s essential to understand these alternatives.

Individual Voluntary Arrangement (IVA)

An IVA is a legally binding agreement with creditors to repay your debts over a typically five-year period. It requires the approval of at least 75% of your creditors by value. While homeowners can apply, they may need to release equity in the final year. An IVA can be an attractive option if you have a regular income and want to avoid the stigma of bankruptcy.

Bankruptcy

Bankruptcy involves the legal liquidation of your assets to pay off your debts, costing £680 to apply. It’s a more severe option, usually resulting in the loss of your home if you own one, but you’re usually discharged after 12 months. Bankruptcy can offer a fresh start, but it’s important to understand the long-term implications on your credit rating and future borrowing ability.

Debt Management Plan (DMP)

A DMP is an informal arrangement with creditors to pay off your debts over time. It’s not legally binding, and creditors aren’t obligated to freeze interest or charges. However, it can be a flexible way to manage your debts. A DMP might be suitable if you have some disposable income but not enough to meet your full debt repayments each month.

Common Mistakes to Avoid

When considering a DRO or any debt solution, there are common pitfalls to avoid:

• Providing Inaccurate Information: Ensure all details regarding your income, assets, and debts are accurate. Incomplete or incorrect information can lead to delays or even rejection of your application.
• Not Seeking Professional Advice: Always consult with a debt adviser to explore your options thoroughly. Professional guidance can help you understand the nuances of different debt solutions and choose the best one for your situation.
• Ignoring Eligibility Criteria: Familiarise yourself with the requirements to avoid unnecessary applications. Attempting to apply for a DRO without meeting the criteria can waste time and resources.

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.