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Policy and Government

New DRO limit makes all the difference to CAP’s first client

calendar02 October 2015

October sees the new Debt Relief Order (DRO) debt and asset limits come into force, as announced back in January. The Insolvency Service predict that this will enable 3,600 more people to use DROs instead of more expensive insolvency options.

Yesterday, CAP submitted the first DRO for a client who was previously ineligible for a DRO due to having just over £18,000 worth of qualifying debt, which built up when her relationship broke down and she lost her job while pregnant. If she had been unable to access a DRO it would have taken her nine and a half years on a severely restricted budget to pay back her debt, or three years to save for the bankruptcy fee.

This follows CAP’s involvement in the campaign to raise the maximum debt limit for a DRO amongst other proposals, as more than a third of our clients, many of whom are vulnerable, were too poor to go bankrupt. The DRO debt limit has now been raised from £15,000 to £20,000 and the asset limit from £300 to £1,000. We estimate that this will allow 34% of our clients who are too poor to go bankrupt and only ineligible for a DRO due to the previous debt limit to access a debt solution.

You can read the Insolvency Services’ announcement, our response to the Insolvency Services’ consultation and CAP’s Too poor to go bankrupt report by clicking the links.

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