Ten years of debt relief orders (DROs)
Used by over 40,000 StepChange Debt Charity clients
6 April, 2019
Today sees the tenth anniversary of the introduction of the debt relief order (DRO) – a type of insolvency that's available to people who don’t own their own home, have less than £20,000 of debt and have very little left to spend at the end of each month.
See how a DRO is helping one of our clients right now.
While eligibility for them is tightly drawn, DROs are simpler and cheaper for those who can use them than either individual voluntary arrangements (IVA) or bankruptcy.
They've proved to have a very valuable place in the suite of possible debt solutions for people with few assets, and without a realistic prospect of clearing their debt in other ways.
40,823 clients have used the DRO scheme since its inception on their journey to becoming debt-free. Around 5% of the recommendations we make to people about solutions that would be suitable for them are for DROs.
Debt relief orders were introduced on 6 April 2009, and by the end of that year 11,831 had been set up – 999 of them by us (then known as the Consumer Credit Counselling Service). By 2018, the total annual number was 27,683 – of which 6,262 were arranged through us.
We have a specialist team based in Birmingham who administer our work as one of the organisations who are able to package and submit DRO applications to the Insolvency Service (something that individuals are not able to do themselves).
Some of the team have been with us ever since DROs started. One of them, Marion, recalls how on 6 April 2009 the phone lines opened at 8.30, and despite expecting a relatively quiet start, the first call arrived at 8.32.
Marion says: “Ten years on, it’s still so very busy… on our first day there were 14 employees in the DRO team, now there are around 60 of us.”
Paula Hogarth, who manages our DRO team in Birmingham, says:
“While they’re only suitable for a minority of people, and it’s important that people go through debt advice to work out what’s best for their own particular circumstances, debt relief orders have firmly taken their place as a valuable option among possible debt solutions.
“DROs suit people with low income, low assets and less than £20,000 of debt. They've proved their worth for over 40,000 of our clients. We've found the Insolvency Service to be helpful and receptive over the past decade, including introducing slicker application processes and taking a pragmatic and proportionate approach if client circumstances change unexpectedly.”
Liz Thomas, Head of Debt Relief Orders for the Insolvency Service, said:
“DROs have helped a substantial amount of people with small levels of assets and little surplus income deal with their debts. Reaching the ten-year anniversary is a significant landmark and we wouldn’t have been able to successfully issue more than a quarter of a million DROs without working with our colleagues in the debt advice sector, including our partners at StepChange.”
Looking ahead, we expect the number of clients for whom DROs are the most appropriate solution to continue to increase, in line with the increase in the number of clients with low income and low assets who contact us for help.