What is a Debt Relief Order and Who Qualifies in 2026/27?
A Debt Relief Order (DRO) is a low-cost, legally binding alternative to bankruptcy administered by the Insolvency Service on behalf of the UK government. It provides immediate protection from creditors for 12 months, after which all qualifying debts included in the order are completely discharged.
To qualify for a DRO in England and Wales during the 2026/27 tax year, you must meet strict financial thresholds set by the Insolvency Service. You can access free professional debt help to verify your situation against these updated statutory criteria:
- Qualifying Debt Limit: Your total qualifying debts must not exceed £50,000.
- Surplus Income Limit: You must have £75 or less left over each month after paying essential household expenses.
- Gross Asset Limit: Your total belongings and savings must not exceed £2,000 in value.
- Vehicle Exemption: You may own one personal motor vehicle worth up to £2,000 (or higher if specially adapted for a physical disability).
- Residency Requirement: You must live, run a business, or have lived in England or Wales within the last 3 years.
Which Debts Can Be Included in a DRO?
Not all personal liabilities can be written off through a Debt Relief Order. When you prepare your application, your debt adviser will categorize your balances into qualifying and non-qualifying debts according to Insolvency Service rules.
Warning: Omitting known liabilities or deliberately transferring assets to friends or family before applying violates the Insolvency Act 1986. Doing so can lead to a Debt Relief Restrictions Order (DRRO) lasting up to 15 years.
The table below outlines common UK personal debt types and their status under current insolvency legislation:
| Debt Category | Qualifying (Included in DRO) | Non-Qualifying (Excluded from DRO) |
|---|---|---|
| Credit & Borrowing | Credit cards, personal loans, overdrafts, store cards | Fraudulent loans, debts incurred through criminal activity |
| Household Bills | Rent arrears, energy debt, water arrears | Mortgage payments or secured loan balances |
| Government & Taxes | Overpaid benefits, council tax arrears | Magistrates Court fines, TV Licence fines, Child Maintenance debts |
| Education & Legal | Unpaid legal fees, personal debt guarantees | Student loans administered by the Student Loans Company |
Step-by-Step Guide: How to Apply for a DRO
Applying for a DRO requires working with a trained specialist known as an approved intermediary. You cannot submit an application independently to the Official Receiver.
1. Gather Financial Records
Collect current bank statements, wage slips or benefit award notices, recent utility bills, council tax statements, and creditor correspondence showing exact balances owed.
2. Complete a Comprehensive Income Assessment
Work through a standard financial statement using a budget planner to evaluate your exact monthly income against reasonable domestic expenditure guidelines recognised by the court.
3. Contact an Approved DRO Intermediary
Reach out to free debt advice organizations such as StepChange, Citizens Advice, or National Debtline. An authorized intermediary will assess whether a DRO is the best solution or if an alternative debt remedy is better suited to your circumstances.
4. Online Application Submission
Your intermediary will complete and submit the official online application directly to the Insolvency Service. The application fee remains £0 for 2026/27.
5. Decision by the Official Receiver
The Official Receiver reviews your file. Once approved, the 12-month moratorium begins immediately, blocking creditors from taking further enforcement action or contacting you.
What Happens During and After the 12-Month Moratorium?
During the 12-month DRO period, you are legally protected from creditor enforcement. However, you must adhere to statutory restrictions monitored by the Insolvency Service.
- You must not obtain credit of £500 or more without disclosing your DRO status to the lender.
- You cannot act as a company director or participate in the promotion, formation, or management of a business without court permission.
- You must inform the Official Receiver immediately if your income increases or if you receive cash lump sums, inheritances, or lottery wins during the 12 months.
If your surplus income rises above £75 per month or your assets exceed £2,000 during the moratorium, the Official Receiver may revoke the order. If your circumstances remain unchanged, all qualifying debts listed in the order are officially written off after day 365.
Impact on Credit Rating and Future Financial Support
While a DRO offers effective debt relief, it leaves a record on your financial file. The order remains on your credit reference file for 6 years from the date it is granted, which will affect your ability to obtain commercial credit, mortgages, or mobile phone contracts.
Your name and address will also appear on the public Individual Insolvency Register on GOV.UK during the DRO and for 3 months after it ends. If you are at risk of violence, your intermediary can apply for a Persons at Risk of Violence (PARV) order to keep your details off the public register.
At SupportFund, we encourage households navigating financial recovery to verify they are receiving all eligible state support to maintain a balanced budget throughout and beyond the DRO process.