DRO tricky updates for debt advisers

What is the debt advice sector saying about DRO?

I am sure you have heard of the abolition of £90 if a Debt Relief Order Intermediary administers a Debt Relief Order (DRO) with the Insolvency Service to write off qualifying debts on behalf of debtors. This is undoubtedly a positive outcome for many who have recently been under the mercy of many Individual Voluntary Arrangement providers. To make it clear, this abolition came into effect on 6th April 2024.

Other noticeable changes have been introduced with the DRO, and the debtor may have to wait a bit longer. The maximum amount of qualifying debts will increase to £50,000 and the cost of an increase in a vehicle to £4,000, and they are to come into effect on 28 June 2024.

Anyone who knows about DRO will know that the qualifying debts were no more than £30,000 before these changes were implemented. The vehicle's value must be less than £2,000 unless it is specially adapted due to disability. Moreover, any assets the debtor owned must be less than £2,000.

Also, once a financial statement has been completed, the debtor’s disposable income must be less than £75 per month to qualify for DRO, and this remains as it is.

What should a debt adviser say to their clients about the debt or their vehicle? The answer is simple: inform them about the options of waiting until 28 June and Breathing Space if enforcement is pending. However, the adviser should always be based on the client’s circumstances.

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