Debt Relief Order criteria to change

In April, the Chancellor announced that the fee for entering a Debt Relief Order (DRO) was to be scrapped. The fee of £90 had in place since DROs came into force in April 2009.

According to figures from the Insolvency Service, 3,436 people entered a DRO in April, the first month since the £90 fee was withdrawn, making it the highest month on record.

The Chancellor also announced changes to the qualifying debt level limit, which has increased from £30,000 to £50,000 and the vehicle asset limit, which has increased from £2,000 to £4,000. Both of these changes come into effect on June 28th.

Responding to the change, Debt Advice Foundation CEO, David Rodger said “These changes to the DRO entry criteria are significant and very welcome. The removal of the fee has had an unequivocally positive impact on DRO take-up, resulting in greater access to DROs for those on low incomes and deficit budgets, the very groups of people that DROs were introduced to help.

We hope the increase in qualifying debt limit and vehicle value will have a similar impact, with the cost of living crisis, which saw households accumulating debt at record levels and increasing second-hand car values, pushing DROs out of the reach of many people they were designed to help”.