Money Wellness
11 Downing Street, the official residence of the chancellor of the exchequer
category icondebts
calendar icon06 Mar 2024

Debt relief orders – what’s changing?

In his spring budget today, the chancellor, Jeremy Hunt, announced some major changes to debt relief orders (DROs) that he claims will help thousands of people struggling with unmanageable debt.

What is a DRO? 

A DRO freezes your debts for 12 months. If your situation doesn’t improve in that time, your debts are written off.

During your DRO, creditors can’t chase you to pay.

Things you need to bear in mind before going ahead with a DRO are your credit rating will be affected for six years and, if your situation improves during the 12 months, your DRO may end meaning you’ll need to make arrangements to repay your debts.

Who can get a DRO?

You might be able to get a DRO if you: 

  • have a relatively low level of debt
  • aren’t a homeowner
  • don’t have many assets
  • have very little spare money at the end of the month

What’s changing?

A number of things are set to change in the coming months. 

No fee 

At the moment, you need to pay the Insolvency Service a £90 administration fee to apply for a DRO. From 6 April, this fee will be scrapped. 

Increase to maximum debt

Currently, you can’t get a DRO if you have debts of more than £30,000. From 28 June, that will increase to £50,000.

Permitted car value doubles 

As it stands, to be eligible for a DRO, you can’t own a car worth more than £2,000. From 28 June, that will increase to £4,000.

Our thoughts 

Here at Money Wellness, we are delighted with today’s announcement. Commenting on the decision to scrap the DRO fee, our director of external relations Sebrina McCullough said:

“We’ve consistently advocated for the eradication of the £90 administration fee for DROs, as it was preventing some of the most vulnerable in the UK getting the debt relief they so desperately need.

“Our research indicates that the fee prevents 44% of those eligible from accessing this solution.

“We warmly welcome today’s change.”

Avatar of Rebecca Routledge

Rebecca Routledge

A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.

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