More people seek help for debts as fee scrapped

Image source, Getty Images

  • Author, Kevin Peachey
  • Role, Cost of living correspondent

A record number of Debt Relief Orders (DROs) were taken out in April, as the 拢90 fee for the insolvency option was scrapped.

DROs are available to those on low incomes and clear existing debt on everything from council tax to energy bills and rent.

Some 3,436 DROs were taken out in April - the highest monthly number since they were introduced in 2009, show.

It drove a rise in the total number of insolvencies in England and Wales, up 10% on the previous month and 4% higher than April last year.

Following an announcement in the Budget, the government scrapped the 拢90 fee to apply for a DRO in England and Wales on 6 April.

The number taken out that month was then 63% higher than the monthly average over the last 10 years.

Debt charity Citizens Advice said that nine in 10 of the people they helped apply for a DRO had struggled to cover the 拢90 fee, with many being priced out of insolvency.

There are specific rules regarding DROs, which mean:

  • It is for those whose debts do not exceed 拢30,000, although this will rise to 拢50,000 from 28 June
  • Applicants have to work with a debt organisation and have no more than 拢75 left each month once essential costs have been paid
  • Those applying for DROs can own a car up to the value of 拢2,000, but this will rise to 拢4,000 from 28 June
  • If an application is accepted, some debts will be frozen for one year, then written off
  • In Northern Ireland, DROs still cost 拢90 and have tighter qualifying criteria, but the Northern Ireland government say similar changes "are currently being considered"
  • In Scotland, the equivalent scheme is a Minimal Asset Process, and the fee was scrapped in 2020

In 2023, some 31,717 DROs were granted in England and Wales - more than during any year for five years.

After the plan to scrap the fee in England and Wales was announced, charities called for greater resources to help deal with a predicted rise in demand.

What to do if I can't pay my debts

  • Talk to someone. You are not alone and there is help available. A trained debt adviser can talk you through the options. Here are some organisations to get in touch with
  • Take control. Citizens Advice suggest you work out how much you owe, who to, which debts are the most urgent and how much you need to pay each month
  • Ask for a payment plan. Energy suppliers, for example, must give you a chance to clear your debt before taking any action to recover the money
  • Check you're getting the right money. Use the independent , or benefits calculators run by , and charities , and
  • Ask for breathing space. If you're receiving debt advice in England and Wales you can apply for a break to for up to 60 days

More tips to help you manage debt