Debt Relief Orders (DROs) | Council Tax Helpline

In short

A Debt Relief Order, or DRO, writes off qualifying debts after 12 months, including council tax arrears.
You can owe up to £50,000, and have up to £75 a month spare and £2,000 in savings or valuables. A car under £4,000 is ignored.
It has been free since April 2024. You apply through an approved debt adviser, never directly.
This year's council tax is not included, so you have to keep paying it.
It stays on your credit file for 6 years, and you cannot have one if you own a home.

A Debt Relief Order is a form of insolvency for people with a low income, few assets, and debts they have no realistic prospect of paying. It runs for 12 months. At the end of that time, the qualifying debts in it are written off, and you no longer have to pay them.

It is available in England and Wales. Northern Ireland has its own version with its own rules. Scotland has different options, set out in the Scotland section.

£50,000 most you can owe
£75 most you can have spare each month
£0 to apply, since April 2024
12 months then the debts are written off

It is free to apply

A lot of older advice online still mentions a £90 application fee. That fee was abolished on 6 April 2024. Applying for a Debt Relief Order now costs nothing.

An approved intermediary, which is usually a debt adviser at a free advice agency, makes the application with you. Reputable intermediaries do not charge for their time either. If somebody asks you for money to arrange a DRO, go elsewhere.

The limits

The limits were raised substantially on 28 June 2024. A lot of people who were turned away before then would qualify now.

Test	Limit
Total debts	£50,000 or less (it was £30,000 before June 2024)
Spare income each month, after reasonable household costs	£75 or less
Savings and things of value you own	£2,000 or less
One car or other vehicle	Left out, if it is worth less than £4,000 (it was £2,000)

You must also:

Not own your home, or have a share in any property
Have lived, worked or run a business in England or Wales at some point in the last 3 years
Not have had a DRO in the last 6 years
Not be in another insolvency procedure, such as bankruptcy or an IVA

A vehicle that has been specially adapted because of a disability can be allowed even if it is worth more than £4,000.

Turned down before June 2024? Ask again. The debt limit went from £30,000 to £50,000 and the vehicle limit from £2,000 to £4,000 on the same day. A refusal under the old rules tells you nothing about whether you would qualify now.

How a DRO works, step by step

Start

Speak to an approved debt adviser

You cannot apply on your own. Advisers at free advice agencies act as the approved intermediary.
Step 2

Your eligibility is checked and the application made

Every debt, your income, your outgoings and anything you own. A debt left off is not covered.
After you apply

The Official Receiver decides

If the order is made, the creditors listed in it must stop chasing you.
Straight away

Tell your council and any bailiff firm

In writing, quoting the order. Enforcement of the arrears must stop.
For 12 months

The order runs

Keep paying this year’s council tax, and tell the Official Receiver if your money situation improves.
After 12 months

The debts are written off

The order shows on the public register until 3 months after it ends, and on your credit file for 6 years.

Council tax and Debt Relief Orders

Council tax arrears are qualifying debts and can be included, as long as they are owed when the order is made. That includes any court costs the council has already added.

Three things matter in practice.

This year’s bill is not included. Council tax for the time after the order is made is a new debt, and you must keep paying it. This catches people out, because the yearly bill and the arrears feel like one thing. Your adviser will include this year’s council tax in your budget.

Enforcement has to stop. Once the order is made, your council cannot continue to recover a debt included in it, and any enforcement firm must stop too. Tell both in writing as soon as the order is made, and quote the DRO reference. Do not assume the message will reach the bailiffs on its own.

Deductions from wages or benefits should stop. If your council was taking council tax arrears from your wages or benefits, it should stop once the order is made. Check your next payslip or benefit statement, and contact the council if the deductions carry on.

What a DRO does not cover

Some debts cannot be included, and you must keep paying them:

This year’s council tax, and other bills for the time after the order
Court fines, and confiscation orders
Child maintenance, and payments ordered in family proceedings
Student loans
Debts that came about through fraud
Compensation you owe someone for injuring them

Mortgages and other secured debts are not covered either. You cannot own a home and have a DRO, and a creditor with security over a car or anything else keeps it.

How to apply

You cannot apply directly to the Insolvency Service. The application has to go through an approved intermediary. That is normally a debt adviser at a free service such as Citizens Advice, StepChange, National Debtline, or your council’s money advice team. MoneyHelper lists free advice services near you.

The adviser will:

Check you meet every test, including what counts as reasonable spending
List every debt you owe, your income, your outgoings and anything you own
Send the application to the Official Receiver
Tell you the outcome

Be thorough about listing debts. A debt left off the application is not included in the order, and that creditor can carry on chasing you.

During the 12 months

The creditors listed in the order cannot take action or ask you to pay, without the court’s permission
You must not borrow £500 or more without telling the lender about the DRO
You cannot be a company director, or set up or run a company, without the court’s permission
You must tell the Official Receiver if your situation improves. An inheritance, a windfall or a big rise in income can mean the order is cancelled
The order is listed on the public Individual Insolvency Register, and comes off 3 months after it ends

At the end of the 12 months, the debts in the order are written off.

Your credit file

A DRO stays on your credit file for 6 years from the date it is made. That makes borrowing harder and more expensive for that time.

That is a real cost, but compare it with the alternative, not with a clean record. Missed payments, defaults and county court judgments damage your credit file too, and they do not come with a date when the debt disappears. For somebody with £15,000 of debt they cannot pay, 6 years is often the better of the two.

Is a DRO right for you?

It usually is when you have almost nothing left each month, no property, few valuables, and debts that would take decades to clear at any amount you could manage.

It usually is not when:

Council tax is your main debt and you could clear it over a reasonable time with a special payment arrangement
You own a home, or a share in one. Look at an IVA instead
You owe more than £50,000. Bankruptcy may be the route
Your income is likely to rise a lot within the next 12 months

If bailiffs are close and you need time to get a DRO application together, a debt adviser can also start a Breathing Space, which pauses enforcement for up to 60 days.

Get free advice first

Every route into a DRO goes through a free adviser, so there is never a reason to pay anybody. If a firm offers to arrange one for a fee, that is a sign to stop.

We can talk it through with you, including whether your council tax arrears would be covered, what happens to this year’s bill, and whether an arrangement with your council would be the better route.