Qualifying for a Debt Relief Order: A Guide for UK Residents

Struggling with debt can feel overwhelming, but there are pathways available that can provide some relief. One such option for residents in the UK is a Debt Relief Order (DRO), which is designed to help individuals who have a low income and minimal assets manage their debts effectively. In this blog post, we’ll explore what a Debt Relief Order is, who qualifies for it, and how you can apply for one in 2025.

What is a Debt Relief Order?

A Debt Relief Order (DRO) is a form of insolvency designed for individuals who owe less than £30,000, do not have much spare income, and own few assets. A DRO pauses most types of debt payments and creditor action for a period of 12 months. If your financial situation hasn’t improved by the end of this period, your debts may be written off.

Eligibility Criteria for a DRO

To qualify for a DRO, there are specific conditions that must be met:

• Total Debt Limit: Your total debt must not exceed £30,000.
• Asset Limit: Your assets must not be worth more than £2,000 in total. This includes savings and investments.
• Vehicle Value: If you own a vehicle, it must not be worth more than £2,000 unless it has been specially adapted because you have a physical disability.
• Disposable Income: After paying your usual household expenses, your disposable income should not be more than £75 per month.
• Residency Requirement: You must have lived in England or Wales for at least three years before applying for a DRO.

Applying for a DRO

To apply for a DRO, you must work with an authorised debt advisor. You cannot apply on your own. The advisor will help you put together your application and submit it to the Insolvency Service. Here are a few steps to consider:

1. Find an Authorised Debt Advisor: Use resources such as the StepChange Debt Charity or the National Debtline to find a qualified advisor.
2. Gather Required Documents: You will need details of your debts, income, living expenses, and assets.
3. Application Fee: There is a fee of £90 to apply for a DRO, which can be paid in installments if you can’t afford it in one go.
4. Submission and Review: Your advisor will review your application and submit it to the Insolvency Service for approval.

Life During and After a DRO

While under a DRO, you must inform the official receiver about any change in your financial situation. You cannot take out credit over £500 without informing the lender about your DRO. Following the successful completion of the DRO period, the debts listed in the order are typically written off, offering a fresh financial start.

Conclusion

A Debt Relief Order could be a suitable option if you meet the strict eligibility criteria and are struggling with significant financial burdens. Always ensure to consult with a professional debt advisor to explore this and other debt relief options that might be available to you.