Press release

Changes to Debt Relief Orders will support people in financial distress

As changes to Debt Relief Orders come into force this week, we talk to the Insolvency Service鈥檚 Andrew Shore, who has overseen the change, to find out all you need to know.

From:
The Insolvency Service
Published
5 April 2024
  • Changes to Debt Relief Orders (DROs) were announced in the 2024 Spring Budget to offer more help to people in debt听
  • Changes include abolishing the 拢90 administration fee to obtain a DRO from April 6听
  • From June, the value of the car a person who wants to obtain a DRO can own will also go up and the total amount of debt which can be covered by a DRO will increase from 拢30,000 to 拢50,000听

The government announced changes to Debt Relief Orders, in the Spring Budget, to offer more support for people struggling with debt.听

We talk to Andrew Shore, Assistant Director of Policy at the Insolvency Service, about DROs and how the changes will make them easier to access for people struggling with problem debt.听

A DRO is a formal debt solution 鈥� a legally-binding process with legal rules and restrictions which can help write-off debts and help people make a fresh start. They are suitable for people who have little spare income to pay-off their debts and who have low-value assets.听听听

Andrew said:听听

We understand how difficult things can be for people who are struggling with bills. That鈥檚 why the government is making it easier for people with debts they can鈥檛 pay back to access the help they need.听

It鈥檚 difficult to know where to turn when dealing with debt, and we would always encourage people to talk to a as a first step.听

If your debt adviser thinks a DRO might be the best solution for you, the new changes will help make it a more accessible option.听

Until April 6, people had to pay a 拢90 administration fee to enter a DRO. But in his Budget speech in March, Chancellor Jeremy Hunt said that although a Debt Relief Order is the best way to resolve debts for some people, the 拢90 fee could deter those who need them the most.听

Andrew says:听

The government is removing that 拢90 fee from April 6, 2024. From that point, DROs will be a free service that we deliver in partnership with the debt sector.听

We know that the fee was, for some, a barrier to dealing with their debts. Removing it is a big step forward in helping those most in need to find a sustainable solution that works for them.听

Other changes to Debt Relief Orders which will come into force in June include:听

  • raising the total amount of debt covered by a DRO from 拢30,000 to 拢50,000听
  • raising the value of the vehicle a person can own when they enter a DRO from 拢2,000 to 拢4,000听

Andrew said:听

Some people need a car for work, mobility or family reasons, but the value of vehicles has risen a lot in recent years. Raising the value of the car you can own will enable more people to access a DRO when they need one.听

And those who owe up to 拢50,000 but don鈥檛 have the money to make repayments to creditors will be able to see a way out of overwhelming debt.听

The changes reflect challenges that people are facing now and will make sure DROs are available to people who really need that help.

The removal of the 拢90 fee comes into operation on April 6, 2024. The rises in the debt threshold and the value of a vehicle come into force on June 28, 2024.听

People struggling with debts may also be able to get support through the government鈥檚 free Breathing Space debt respite scheme. The scheme offers a 60-day break from the build-up of interest and other fees and puts a pause on contact and enforcement action by creditors. Breathing Space is accessed through a regulated debt adviser.听

Further Information听

Updates to this page

Published 5 April 2024