DRO debt threshold could rise to £30,000 under wider reforms

The proposed changes include:

• increasing the total amount of debt allowable to £30,000 (from £20,000);
• increasing the value of assets owned by the individual to £2,000 (from £1,000);
• increasing the level of surplus income to £100 (from £50) per month.

Joanna Elson CBE, chief executive of the Money Advice Trust, said: “We welcome these proposed improvements to DROs – and we are pleased the Insolvency Service is listening on the need to adapt the debt options landscape to Covid-19. Beyond these changes, we ned a full review of all debt options in the wake of Covid-19.”

Deborah Ware, chief operating officer of debt advice provider Financial Wellness Group, said: “The changes to the DRO rules proposed in this consultation will help more people with serious problem debt get a fresh start.

“However, we regularly complete applications for customers but are unable to submit them because the customers don’t have £90 to pay the Insolvency Service fee.

“To ensure people who need a DRO are able to access one we’d also like to see the application fee reduced or waived.”

The consultation closes 25 February 2021.