Debt Relief Orders Overhauled: Spring Budget Offers Hope to Debtors

May 30, 2024

Debt Relief Orders (DROs) have undergone significant changes following announcements in the 2024 spring budget, aimed at providing vital assistance to individuals burdened by debt. These alterations promise a fresh start for those in financial distress.

Changes to Debt Relief Orders

Effective from April 6, 2024, the administration fee of £90 for DROs has been abolished, easing the financial burden on applicants. Moreover, additional amendments slated to take effect on June 28, 2024, aim to further enhance the efficacy of DROs are:

  1. Increased Debt Coverage: The total amount of debt covered by a DRO will rise from £30,000 to £50,000, broadening the scope of relief available to debtors facing substantial financial liabilities.
  2. Expanded Vehicle Allowance: The threshold for vehicle ownership upon entering a DRO will increase from £2,000 to £4,000. This adjustment acknowledges the necessity of vehicles for work or family obligations and reflects the rising value of vehicles in recent years.

Breathing Space Scheme

In addition to the alterations in DRO, individuals struggling with debt may find relief through the government’s Breathing Space debt respite scheme. This initiative, accessible through regulated debt advisers, offers a 60-day respite from the accrual of interest and other charges, while also halting creditor contact and enforcement actions.

Alleviating the Financial Strain on Vulnerable Individuals

These reforms underscore the government’s commitment to alleviating the financial strain on vulnerable individuals and providing avenues for debt relief and recovery. By facilitating access to DROs and bolstering support mechanisms like Breathing Space, policymakers aim to offer a lifeline to those in need, enabling them to chart a path towards financial stability and a brighter future.

If you or your business are experiencing any financial pressures and are ready to explore your options, contact BRI Business Recovery and Insolvency today. We can provide you with impartial advice for your personal or business financial situation.