Insolvency Service
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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’s Andrew Shore, who has overseen the change, to find out all you need to know.

  • Changes to Debt Relief Orders (DROs) were announced in the 2024 Spring Budget to offer more help to people in debt 
  • Changes include abolishing the £90 administration fee to obtain a DRO from April 6 
  • 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 £30,000 to £50,000 

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

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. 

A DRO is a formal debt solution – 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.   

Andrew said:  

We understand how difficult things can be for people who are struggling with bills. That’s why the government is making it easier for people with debts they can’t pay back to access the help they need. 

It’s difficult to know where to turn when dealing with debt, and we would always encourage people to talk to a regulated debt adviser as a first step. 

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. 

Until April 6, people had to pay a £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 £90 fee could deter those who need them the most. 

Andrew says: 

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

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. 

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

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

Andrew said: 

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. 

And those who owe up to £50,000 but don’t have the money to make repayments to creditors will be able to see a way out of overwhelming debt. 

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 £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. 

People struggling with debts may also be able to get support through the government’s 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. 

Further Information 

Channel website: https://www.gov.uk/government/organisations/insolvency-service

Original article link: https://www.gov.uk/government/news/changes-to-debt-relief-orders-will-support-people-in-financial-distress

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