A Debt Relief Order (DRO) writes off qualifying debts after 12 months if you have almost no spare income and very few assets. It is available only to people who have lived or worked in England or Wales in the last three years, and the rules are narrow, so for many people another route fits better. If you are in debt and have no money, here is what to do first and how to tell whether a DRO is right for you.
Do this first: free advice and breathing space
If you are wondering how to pay off debt with no money, the honest answer is that you start with free advice rather than more borrowing. Contact a free debt adviser: StepChange, National Debtline, Citizens Advice or MoneyHelper. Their help costs nothing, and you should avoid any company that charges to sort out your debts. An adviser can also help you apply for breathing space in England and Wales: up to 60 days in which creditors must pause enforcement action and most interest and charges stop.
Who can get a DRO
| Test | Limit |
|---|---|
| Qualifying debts | £50,000 or less |
| Spare income after essential costs | £75 a month or less |
| Total assets | £2,000 or less |
| Vehicle | No vehicle worth £4,000 or more |
| Residence | Lived or worked in England or Wales in the last three years |
| History | No DRO in the past six years, and not currently bankrupt or in an IVA |
The debt limit rose from £30,000 to £50,000 in June 2024, and the vehicle limit from £2,000 to £4,000. In practice, homeowners rarely qualify because of the asset limit.
How it works and what it costs
You can't apply yourself. An approved intermediary, which means a free debt adviser, completes the application with you and sends it to the Official Receiver. There is no application fee for new applications since April 2024; older websites still quote £90, which is out of date. GOV.UK has the official guidance.
For 12 months, creditors can't chase the debts included. You must tell the Official Receiver if your income or assets rise. At the end, the qualifying debts are written off. Some debts, such as court fines and child maintenance arrears, aren't covered, and your adviser will confirm which are. A DRO appears on a public register and stays on your credit file for six years.
If you don't qualify
- Debt management plan. An informal arrangement to repay what you can afford each month, free through the charities above. Creditors don't have to freeze interest.
- Individual voluntary arrangement (IVA). A formal agreement set up by an insolvency practitioner, which comes with fees.
- Bankruptcy. A formal process with an application fee and wider consequences, usually used for larger debts.
An adviser will compare these for your circumstances. Scotland and Northern Ireland have their own arrangements.
Clearing debt without affecting your credit score
No legitimate route makes debt disappear without leaving a mark. Missed payments and defaults stay on your credit file for six years, and a debt management plan or DRO is recorded too. What protects your score is paying on time and clearing debts in full when you can. Be wary of firms that promise to wipe debts or repair credit for a fee.
Consolidating credit card debt with bad credit
A consolidation loan helps only if the new rate is lower than what you pay now and you don't run the cards up again. With a poor credit file, lenders often charge high rates, and loans secured against a home put the property at risk. Balance transfer cards generally need a good score. If you want to know how to consolidate credit card debt with bad credit, compare the total cost of any loan with a free debt management plan first.
If you are also rebuilding your credit file, see credit cards for bad credit in the UK.