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Debt Relief Order changes

Author: ICAEW

Published: 21 May 2024

Debt Relief Orders (DROs) have undergone some changes recently to provide more support for people struggling with debt. Here’s what insolvency practitioners (IPs) need to know.

The changes undertaken by the UK Government in the Spring Budget make it easier for people struggling with debt to access the help they need.

  1. Abolishing the Administration Fee: as of 6 April 2024, the £90 administration fee for DROs has been abolished. Previously, individuals had to pay this fee to enter a DRO, but now it’s a free service delivered in partnership with the debt sector.
  2. Increased Debt Coverage: starting from 28 June 2024, the total amount of debt covered by a DRO has increased from £30,000 to £50,000. This change allows more people to access a DRO when they need one.
  3. Higher Vehicle Value: also effective from 28 June 2024, the value of the vehicle a person can own when entering a DRO has been raised from £2,000 to £4,000. This adjustment recognises that some people need a car for work, mobility, or family reasons, and the value of vehicles has risen significantly in recent years.

These adjustments aim to provide more support for individuals facing financial distress and help them find a sustainable solution to their overwhelming debt.


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