UK Debt Relief Order (2026/27): No Fee, £50,000 Cap

QWhat is a Debt Relief Order?

A formal insolvency procedure for low-income debtors with limited assets + qualifying debts under £50,000. Cheaper alternative to bankruptcy. The £90 application fee was abolished on 6 April 2024 - the application is now FREE to submit (£0). Your qualifying debts are frozen for 12 months ("moratorium period") + discharged at the end if circumstances haven't materially improved. During the 12 months: creditors cannot pursue debts; you cannot apply for credit over £500 without disclosing the DRO; certain restrictions on roles (e.g. company director). After discharge: debts written off; you can rebuild credit.

QWho qualifies for a DRO?

Strict criteria. (a) Total qualifying debt under £50,000 (raised from £30k on 28 June 2024). (b) Monthly surplus income under £75 after essential expenses (use Standard Financial Statement to calculate). (c) Total assets under £2,000 - excluding household goods, tools of trade, and one vehicle up to £4,000. (d) England / Wales resident (Scotland has Minimal Asset Process; Northern Ireland uses DRO via NI Insolvency Service). (e) Not had a DRO in the previous 6 years. (f) Not undischarged bankrupt or in IVA. Many people who think they're ineligible are actually qualifying - check via free debt advice.

QWhich debts can be included in a DRO?

Most unsecured debts qualify: credit cards, personal loans, overdrafts, payday loans, store cards, catalogue debts, council tax arrears, water bills, energy arrears, mobile phone bills, HMRC tax debts, benefit overpayments, rent arrears (some). NOT included (must keep paying): student loans, child maintenance arrears, court fines, social fund loans, secured debts (mortgage - though arrears separately treated), debts incurred via fraud. Excluded debts continue + must be paid. The application requires a comprehensive list of all debts; failing to list a debt means it isn't discharged.

QHow do I apply for a DRO?

Through an "Authorised Intermediary" - usually free debt advice charity (StepChange, Citizens Advice, National Debtline, CAP). They check eligibility, complete the application, submit to the Insolvency Service. You cannot apply directly to the Insolvency Service. Both the intermediary AND the application are free - the £90 application fee was reduced to £0 on 6 April 2024. Application typically takes 4-8 weeks from initial advice to DRO grant. During application: gather statements of all debts + income + expenses + assets.

QWhat restrictions apply during a DRO?

12-month moratorium period restrictions: (a) Cannot borrow over £500 without disclosing the DRO. (b) Cannot act as company director without court permission. (c) Cannot trade under a different business name without disclosure. (d) Cannot manage a charity without permission. (e) Specific professional restrictions (some financial services + insolvency practitioner roles). (f) Bankruptcy Restrictions Undertakings can be requested by Insolvency Service if there's evidence of inappropriate conduct (e.g. running up debt knowing the DRO was coming). Most people's daily lives are largely unaffected.

QWhat happens after the 12 months?

If your circumstances haven't materially improved (you still meet the surplus + asset tests), debts included in the DRO are DISCHARGED - written off. You owe nothing further on them. The DRO remains on your credit file for 6 years from grant date (same as bankruptcy). Credit rebuilding starts immediately after discharge - small credit limits, secured credit cards, gradual access to mainstream credit over 3-5 years. If circumstances HAVE improved during the 12 months (e.g. you got a higher-paid job), the Insolvency Service may convert the DRO to a payment requirement OR revoke it.

QDRO vs IVA vs bankruptcy?

DRO: FREE application (no fee since April 2024), 12-month moratorium then discharge. Best for low-income debtors with debts under £50,000 + assets under £2,000. IVA: 5-6 year arrangement with Insolvency Practitioner taking ~15-25% fee from payments. Best for moderate-income debtors with debts £15k-£100k+ + some surplus income. Bankruptcy: £680 application fee, 1-year discharge typically, 3-year Income Payment Agreement if surplus. Best for higher debts (£20k+) where DRO eligibility fails OR for self-employed needing to start fresh. All three appear on credit file for 6 years. Take advice before choosing - it's the highest-stakes financial decision most people face.

QWill a DRO affect my employment?

Most jobs: no. Specific roles: yes. Financial services roles regulated by FCA must disclose; many will continue post-disclosure but some firms restrict. Solicitors, accountants, insolvency practitioners must disclose to professional body + may face restrictions. Civil service security clearance may be reviewed. Most public sector + private sector roles unaffected. School + nursery staff unaffected. NHS clinical roles unaffected. Check with employer / professional body if uncertain BEFORE applying - sometimes the DRO is grounds for dismissal in specific roles + alternative arrangements (IVA, bankruptcy) may be preferable.