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New legislation introduced to increase DRO eligibility

The changes to the eligibility criteria will see the level of debt at which people can apply for a DRO increase from £20,000 to £30,000

The Insolvency Service has revealed that new legislation will be introduced to increase the number of people eligible for Debt Relief orders (DRO).

The changes to the eligibility criteria will see the level of debt at which people can apply for a DRO increase from £20,000 to £30,000.

DRO’s 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.

The relief 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.

It is expected that over 13,000 more people may use DROs in the next 12 months, an increase of nearly 50%, compared with 2019.

Lord Callanan, minister for corporate responsibility, said: “DRO’s 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 aim to 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.

It will also raise the value of a single motor vehicle that can be disregarded from the total value of assets from £1,000 to £2,000.

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