Update 29 June 2021
New monetary eligibility limits for those eligible for
Debt Relief Orders come into effect from today – helping
more people get a fresh start. Find more
information here.
Legislation can be found here:
More people will be able to access the debt solution,
giving them a fresh start, as a result of the changes
announced today, which will come into force at the end of
June.
The changes to DRO eligibility criteria will see the level
of debt at which people can apply for a DRO increase from
£20,000 to £30,000. It is expected that over 13,000 more
people may use DROs in the next 12 months compared to 2019,
an increase of nearly 50 per cent.
Minister for Corporate Responsibility
said:
Debt Relief Orders help those with problem debt get to
grips with their finances, these changes will enable more
people experiencing problem debt to get a fresh start.
The changes to the criteria will:
- Increase the threshold on the value of assets that a
debtor can hold and be eligible to enter into a DRO from
£1,000 to £2,000.
- Increase the value of a single motor vehicle that can
be disregarded from the total value of assets from £1,000
to £2,000.
- Increase the level of surplus income received by the
debtor before payments should be made to creditors from £50
to £75 per month.
- Increase the total debt allowable for a DRO from
£20,000 to £30,000.
The new criteria will follow a
consultation earlier in the year. The changes are due
to come into effect on 29 June to coincide with the end of
the first 60 days of the Government’s
Breathing Space scheme, which began on 4 May 2021.
Debt Relief Orders were introduced in 2009 and are aimed at
individuals with relatively low levels of unmanageable debt
who have nothing to offer their creditors, such as assets
or disposable income, and for whom bankruptcy would be a
disproportionate response. A DRO sees debt repayments and
interest frozen, while creditors are unable to pursue
debtors for a 12-month period, after which the debts are
written off.
Notes to editors
- DROs apply to England and Wales only (personal
insolvency is devolved to Scotland and Northern Ireland.)
