-
The review assessed the impact of the 2021 and 2024 reforms,
which raised the maximum debt level.
-
Reforms widened access for people with low incomes and low
assets.
-
It also considered the effect of the removal of the £90
administration fee.
Recent changes to Debt Relief Orders (DROs) have successfully
enabled more people in financial difficulty to access debt
relief, according to an Insolvency Service review.
The review assessed the impact of the 2021 and 2024 reforms,
which raised the maximum debt level, increased the asset
allowances, and widened access for people with low incomes and
low assets.
The review also considered the effect of the removal of
the £90 administration fee, which was found to be
having a significant influence on
DRO take-up; highlighting the important impact that
such barriers to entry' can have on people accessing
help.
Overall, the review concluded that the reforms have helped more
people in financial distress access a suitable debt solution and
achieve a fresh start.
Key findings
-
The 2021 eligibility changes led to a 27% increase in
the number of people obtaining a DRO.
-
The 2024 eligibility changes led to a 9% increase.
-
The removal of the £90 fee (in April 2024) resulted
in a 78% increase in DRO volumes as people moved to
a more proportionate debt relief
solution.
-
Lowering financial and administrative barriers achieved
the policy objective to make it easier for
people struggling with problem debt to access
debt relief.
The Insolvency Service's Co-Director for Strategy, Policy and
Analysis, Claire Hardgrave, said:
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.
Removing unnecessary barriers means we can maximise the support
available and get people on the path to financial
stability.
We are grateful for the hard work of frontline
practitioners not least debt advisors for embracing these reforms
and helping to make real positive change to this most challenging
issue of personal debt.
We will use this evidence to support our ongoing work, both
across the debt advice sector and government to improve
outcomes for people in financial difficulty.
Further information
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Information on the latest legislation can be found
here: Changes to Debt Relief
Order Criteria - Impact Assessment
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Debt Relief Orders provide debt relief for people with low
incomes, low assets, and debts below a set threshold.
-
The 2021 reforms increased the debt limit to £30,000, raised
the asset limit to £2,000, and allowed a vehicle worth up to
£2,000.
-
The 2024 reforms increased the debt limit to £50,000 and
raised the vehicle allowance to £4,000.
-
Until April 6, 2024, people had to pay a £90 administration
fee to enter a DRO.
