Debt relief order changes help struggling people make fresh start

More people in financial difficulty have been able to access debt relief thanks to recent changes to debt relief orders (DRO).

A DRO lets you freeze your debts for 12 months and during this time, creditors aren’t allowed to chase you to pay.

If your situation doesn’t improve during the 12 months, your debts are written off.  

But many people were unable to access DROs until they were reformed in 2021 and 2024.

And now, the Insolvency Service says the changes have “widened access for people with low incomes and low assets”, and helped those in financial distress “achieve a fresh start”.

What changed?

In April 2024, the £90 administration fee you previously had to pay to apply for a DRO was scrapped. 

And then the rules were changed so the highest amount of debt you can have to get a DRO was £50,000 - up from £30,000.  

The old rules also meant you couldn’t own a car worth more than £2,000 to be eligible for a DRO, but the limit was increased to £4,000. 

“Removing unnecessary barriers means we can maximise the support available and get people on the path to financial stability,” said Claire Hardgrave of the Insolvency Service.

“At the heart of these reforms is a recognition of the real hardship faced by people living with unmanageable debt, and the important positive impact that debt relief and insolvency can have.”

Who can get a DRO? 

You may be eligible for a DRO if you: 

• can’t pay your debts
• don’t own a home
• don’t have many assets
• have very little spare money at the end of the month
• haven’t had a DRO in the last six years 

But remember that a DRO will affect your credit rating for six years  

And if your situation improves during the 12 months, your DRO could end, meaning you’ll need to repay your debts.

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