Debt Relief Order Qualifying Debts: What Can Be Included

Which debts can be included in a DRO?

The law works by exclusion. Everything is a qualifying debt unless it falls into one of the excluded categories. The debts most often listed in DRO applications are:

• Credit cards, store cards and charge cards
• Personal loans, including high-cost and payday loans
• Bank overdrafts
• Catalogue accounts and buy-now-pay-later balances
• Rent arrears on a current or former tenancy
• Gas, electricity, water and phone arrears
• Council tax arrears for past years
• Income tax, National Insurance and VAT arrears
• Benefit and tax credit overpayments
• Money borrowed from family and friends
• Hire purchase shortfalls after the goods have been returned
• Old mobile phone and broadband contracts
• Business debts of a sole trader

A debt that has been sold to a collection agency is still the same debt and still qualifies. List the original creditor and the current owner so that both are told about the order. Money owed to relatives must be listed too. It cannot be left out to spare feelings, and it is written off at the end in the same way as a bank loan. Our guide to how a DRO works explains what happens to these debts once the order is made.

How the £50,000 limit is worked out

The limit applies to the total of your qualifying debts on the date of application. The figure is the current balance on each account, not the amount you originally borrowed. Interest, default charges and collection fees already added to the balance count in full. Excluded debts are left out, however much they affect your budget.

Your adviser will usually ask for recent statements and a copy of your credit report from each of the main credit reference agencies to confirm the balances. Where a creditor has not written for some time, the adviser may contact them for an up-to-date figure. The limit rose from £30,000 to £50,000 on 28 June 2024. The income, asset and debt limits page covers the full set of thresholds.

Joint debts and guarantor loans

A joint debt counts in full, not in half. If you share a loan, overdraft or joint account, you are liable for the whole balance, so the whole balance goes towards your £50,000 total. A £12,000 joint loan goes in as £12,000. The DRO protects you alone, and the creditor can still pursue the other borrower for all of it.

If you are the borrower on a guarantor loan

The loan is your qualifying debt and goes into the DRO. The lender will then usually turn to your guarantor for payment, because the order does not protect them. Many people choose to warn their guarantor before applying.

If you are the guarantor

Your liability under the guarantee is a qualifying debt of yours, whether or not the lender has yet asked you to pay. Your adviser will list it at the full outstanding balance. Anyone who shares a debt with you should seek their own advice before you apply.

Debts with a CCJ, in default or up to date

A debt does not have to be in arrears to be included. An account you have kept up to date qualifies just as much as one that defaulted two years ago. Advisers normally recommend including every qualifying debt rather than protecting one lender. Paying one creditor and not others can look like a preference under the two-year look-back rule.

Debts with a County Court Judgment (CCJ) also qualify. The judgment does not change the nature of the underlying debt. Once the DRO is approved, the creditor cannot instruct bailiffs or apply for an attachment of earnings without the court's permission. The CCJ stays on your credit file for six years from the judgment date, as does the DRO entry. See how a DRO affects your credit file.

Business debts of sole traders

If you were self-employed as a sole trader, your business debts are personal debts in law and they qualify. That includes unpaid supplier invoices, business overdrafts and loans in your own name, trade credit, and arrears of income tax, National Insurance and VAT. Business Debtline specialises in advice for people in this position.

Debts of a limited company belong to the company, not to you, unless you signed a personal guarantee. A guarantee you gave for a company's borrowing is a personal debt and can be included. Bear in mind that the DRO restrictions stop you acting as a company director without the court's permission. See DRO and employment.

What if you forgot a debt?

A debt left off the application is not automatically covered by the DRO. People sometimes find an old account after the order is made, often when a collection letter arrives for something they thought was closed.

In some circumstances the debt can be added after approval, provided the revised total is still under £50,000 and the omission was genuine. Ask your adviser to contact the Insolvency Service as soon as you find it. If the debt cannot be added, for example because it takes you over the limit or the DRO has ended, it remains payable in full. This is why advisers check your credit reports carefully before submitting.

What if your debts are close to £50,000?

Interest and charges keep building while an application is prepared, so balances can rise between the day you gather statements and the day the adviser submits. If your total is within a few thousand pounds of the limit, a forgotten account or a month of added interest can push you over it. The application would then be refused.

Tell your adviser the total is tight. They can obtain confirmed balances close to submission and talk through alternatives such as bankruptcy or an IVA in case you do not fit. Repaying a relative shortly before you apply, while leaving other creditors unpaid, is the textbook example of a preference and can lead to refusal.