Changes should see more people qualify for Debt Relief Orders

The qualifying criteria for Debt Relief Orders (DROs) in England and Wales are being relaxed slightly, which should enable an extra 13,000 people each year to access the debt solution. The changes, announced by the Insolvency Service, are due to come into effect on the 29th of June.

Debt Relief Orders are a way of dealing with problem debt – you can find out more about DROs here. Once your application for a Debt Relief Order has been approved, then you won’t make any further payments toward the debts included in it for 12 months. If, at the end of that time, your situation hasn’t improved, then all the debts included on your DRO are written off.

What’s changing

• In the past, the maximum debt allowable in a DRO was £20,000 – this is increasing to £30,000.
• You’re only eligible for a DRO if your disposable income – the money you have available to pay your debts after paying for your bills and other essentials – is below a certain level. This limit is increasing from £50 to £75.
• Owning assets worth more than a certain amount can also make you ineligible for a DRO – this limit is increasing from £1,000 to £2,000. There is an additional limit for your car, and this is also increasing from £1,000 to £2,000.

What isn’t changing

To apply for a DRO you have to pay a fee of £90 to the Insolvency Service. We’re disappointed that the Insolvency Service has made no changes to this fee, as we know it acts as a barrier preventing some people from accessing the solution.

When you start a DRO or any other insolvency solution, your name is published online in the Individual Insolvency Register. We’re campaigning for this register to be made private – you can find out more and sign our petition here.

Is a DRO right for you?

If you have an existing debt solution with Financial Wellness Group, but are interested in a DRO, then please speak to a member of the customer service team. If you have a debt solution with us we’ll automatically consider whether a DRO is right for you, and recommend it if it is, when we complete your annual review with you.

If you’re struggling with problem debt and you want to know if a DRO or any other debt solution is the most suitable way forward, you can find information and sources of free debt advice via the Money Advice Service website.