LONDON, July 10 -- The government of the United Kingdom issued the following news:
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The review assessed the impact of the 2021 and 2024 reforms, which raised the maximum debt level.
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Reforms widened access for people with low incomes and low assets.
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It also considered the effect of the removal of the £90 administration fee.
Recent changes to Debt Relief Orders (DROs) have successfully enabled more peoplein financial difficulty to access debt relief, according to an Insolvency Service review.
The review assessed the impact of the 2021 and 2024 reforms, which raised the maximum debt level, increased the asset allowances, and widened access for people with low incomes and low assets.
Thereviewalso considered the effect of the removal of the £90 administration fee,which was found to be havingasignificant influenceon DROtake-up;highlighting the important impact that such 'barriers to entry' can have on people accessing help.
Overall, the review concluded that the reforms have helped more people in financial distress access a suitable debt solution and achieve a fresh start.
Key findings
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The 2021 eligibility changes led to a 27%increase in the number of people obtaining a DRO.
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The 2024 eligibility changes led to a 9% increase.
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The removal of the £90 fee(in April 2024)resulted in a 78% increase in DRO volumesaspeople moved to a moreproportionatedebt relief solution.
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Lowering financial and administrative barriersachieved the policyobjectivetomake it easier for people struggling with problem debt to access debtrelief.
The Insolvency Service's Co-Director for Strategy, Policy and Analysis, Claire Hardgrave, said:
At the heart of these reforms is a recognition of the real hardship faced by people living with unmanageable debt, and theimportantpositiveimpactthat debt relief and insolvencycan have.
Removing unnecessary barriers means we can maximise the support available and get people on the path to financial stability.
We are grateful for thehard workof frontline practitioners - not least debt advisors - for embracing these reforms and helping to make real positive change to this most challenging issue of personal debt.
We will use this evidence to support our ongoing work,both across the debt advice sector and governmentto improve outcomes for people in financial difficulty.
Furtherinformation
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Information on the latest legislation can be found here:Changes to Debt Relief Order Criteria - Impact Assessment
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Debt Relief Orders provide debt relief for people with low incomes, low assets, and debts below a set threshold.
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The 2021 reforms increased the debt limit to £30,000, raised the asset limit to £2,000, and allowed a vehicle worth up to £2,000.
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The 2024 reforms increased the debt limit to £50,000 and raised the vehicle allowance to £4,000.
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Until April 6, 2024, people had to pay a £90 administration fee to enter a DRO.
Disclaimer: Curated by HT Syndication.
