StepChange Debt Charity sees big rise in DROs, but warns over costs of rising demand

1 February, 2013

Coinciding with the publication of the latest insolvency statistics today (February 1), StepChange Debt Charity announced that last year it saw a 36 percent increase in the number of Debt Relief Orders (DROs) that it administers.

The charity however is warning that in light of forthcoming cuts to Legal Aid, efforts must be made to reduce the costs associated with administering DROs incurred by debt advice charities. Otherwise this valuable form of debt relief may become less available to some of the least well-off and most vulnerable people it is intended to help.

The charity remains supportive of DROs and believes that they represent a more consumer friendly alternative to bankruptcy.

Reducing costs

StepChange Debt Charity is concerned that the large cuts to Legal Aid will potentially reduce the number of authorised intermediaries and that it and similar organisations will bear an increased financial burden as a result. This problem is exacerbated by the increased numbers of DROs and the high costs associated with their administration.

StepChange Debt Charity’s director of external affairs Delroy Corinaldi said: “Administering DRO applications is both onerous and costly for debt advice charities, especially at a time when funding is coming under huge pressure. 

“We have asked the Insolvency Service to look for ways to reduce the costs and red tape.  We urge them to prioritise this to help ensure debt advice charities can cope with the growing demand for DROs”.