Three key changes to Debt Relief Orders in England and Wales for 2024

James, former CAP client, looking through paperwork with his CAP Debt Coach, Louise
James (left) became debt free through a DRO with CAP. 
Hayley Tearall

Digital Content Producer

Changes to the Debt Relief Order eligibility criteria throughout 2024. 

Please note: this information about the changes to Debt Relief Orders (DROs) applies to England and Wales only.

In the UK’s Spring Budget in early 2024, it was announced that some changes will be made to the criteria a person must meet to be able to access a Debt Relief Order (DRO) in England and Wales.

A Debt Relief Order (DRO) is a formal debt solution that offers people an affordable and suitable route out of debt.

A DRO is a form of insolvency’, where the debt is written off. DROs are available to those who meet certain criteria, including having a low income and very few assets, where repaying the debts is not possible.

At CAP, around 50–60% of people are advised that a DRO is the most suitable route out of debt for them.

1. The £90 DRO fee has been removed

One key change to Debt Relief Orders is that the £90 administration fee has been removed. This came into effect from 6 April 2024.

Those who require a Debt Relief Order have very little disposable income after paying for the essentials, meaning it’s often difficult or impossible to save for the cost of a DRO. Removing the £90 fee opens up the option of a DRO for many who would otherwise have been unable to afford one.

Removing the £90 DRO fee also makes going through the DRO process with clients a lot more simple. Previously, CAP would need to apply for grants to help those who couldn’t afford the cost of a DRO to enable them to access a debt solution. With this barrier removed, we can focus on supporting people through the rest of the debt free process.

2. The debt threshold is increasing from £30,000 to £50,000

From 28 June, the amount of debt covered by a DRO is going up from £30,000 to £50,000. Those with higher levels of debt would have had to rely on other, more expensive routes out of debt such as bankruptcy, which costs £680. This massive cost excludes many who cannot afford it, so increasing the debt threshold opens the door to freedom for so many who previously could not access a DRO and could not afford the bankruptcy fee.

For those on low incomes with little to no disposable income, increasing the debt threshold offers a vital lifeline for those who may have otherwise been imprisoned by high levels of debt for their entire lives.

3. You can soon own a vehicle worth £4,000 and still qualify

From 28 June, you can own a vehicle worth £4,000 and still enter a DRO. Until then, the limit is £2,000.

People rely on having a vehicle for all sorts of everyday activities, from getting work, to picking up the children from school, to being able to access a supermarket (or a cheaper one that’s slightly further away) or connect with loved ones. Having access to a vehicle is a major means to access various shops or places to make an income through employment. It should never be a choice between being able to access a debt solution or giving up all the things you need to function.

Although vehicle prices have increased over the last few years and the change partially reflects this, allowing people to own a car worth £4,000 is crucial in allowing people to get out of debt while continuing to engage in essential, day-to-day activities.

Why is CAP celebrating these changes to DROs?

Here at CAP, we’ve been campaigning for changes to DROs for a long time, because over 50% of our clients currently rely on this as their most suitable route out of debt.

Back in 2021, we were pleased to see changes to the eligibility criteria for DROs, including increasing how much debt a person could owe from £20,000 to £30,000, the value of a vehicle someone could own being increased from £1,000 to £2,000, and no longer counting mobility scooters as assets’ or vehicles within the allowance. The UK Government predicted that these changes would open up DROs as a vital debt solution to 13,000 more people within the following 12 months alone, an increase of almost 50%.

However, there was more to be done. Debt Relief Orders still remained inaccessible to many, especially those on the lowest incomes with no other solution available to them. That’s why we were pleased to hear that throughout 2024, the DRO criteria will be changing again, making it available to so many more people at this crucial time where costs are high and people are struggling to afford the basics. These key changes are important steps in the right direction in making affordable debt solutions accessible to all who need them.

While this is one big step towards providing more people with an affordable debt solution, there is much more to do in the fight against UK poverty. These changes do not stop people from falling into debt due to low income, unsustainable budgets to begin with, nor does it stop people from falling back into debt again if their income simply does not cover basic living expenses.

Get free, expert debt help through CAP

Are you in debt and looking for a way out? Perhaps a DRO could be one of the options suitable for you. CAP offers free, face-to-face expert debt help in local communities across the UK – get started on your journey out of debt today.

Access free, expert debt help through CAP

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