Consultation outcome

Debt Relief Orders

From:: The Insolvency Service
Published: 12 January 2021
Last updated: 9 June 2021 — See all updates

Applies to England and Wales

Detail of outcome

Having taken account of all views expressed the Government intends to lay legislation in Parliament at the beginning of June, to commence at the end of June.

The changes to the criteria will:

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.
Increase the value of a single motor vehicle that can be disregarded from the total value of assets from £1,000 to £2,000.
Increase the level of surplus income received by the debtor before payments should be made to creditors from £50 to £75 per month.
Increase the total debt allowable for a DRO from £20,000 to £30,000.

Most responses recommended that DROs should not be looked at in isolation and consideration should be given as to whether changes are needed to the wider personal insolvency framework. The response document therefore highlights that the Government will be looking to issue a Call for Evidence on the whole personal insolvency landscape, in due course.”

Original consultation

Consultation description

The UK’s personal insolvency regime seeks to balance the need to provide debt relief to individuals in inescapable financial difficulties, giving them a ‘fresh start’, whilst making a return to creditors from the assets and income of the individual.

There are a number of different options available to help individuals in financial difficulty, ranging from informal arrangements with creditors to solutions within the statutory framework (including individual voluntary arrangements (IVAs), bankruptcy and debt relief orders (DROs)).

DROs were developed and introduced in April 2009 following a consultation by Government in 2004 (“A choice of paths: better options to manage over-indebtedness and multiple debt”) that identified there were people in long term debt difficulty who had nothing to offer their creditors, such as assets or disposable income, and for whom bankruptcy would be a disproportionate response. Delivered in partnership with the debt advice sector, DROs provide low cost, easy access to debt relief for those with relatively low levels of unmanageable debt, and no means with which to pay their creditors, providing a fresh start for the most vulnerable. At the end of the DRO period (usually 12 months) the debts included within the order are written off (‘discharged’) and the individual is no longer responsible for paying them.

Documents