£2.3bn debt relief granted in 10 years of DROs

In the decade since first Debt Relief Order (DRO) was approved in 2009, £2.3 billion of debt relief has been granted helping more than a quarter of a million people out of debt.

Although never available in Scotland, the first DRO was approved 10 years ago in April 2009 with the aim of assisting people with small levels of assets and little surplus income deal with their debts.

Since then, the Insolvency Service has approved more than 254,000 DROs to people with debts worth an average of £9,400.

People apply for a DRO through an authorised debt adviser, from organisations such as Citizens Advice, StepChange and PayPlan, who submit applications on-line to the Official Receiver on their client’s behalf.

Approximately 99 per cent of DROs are approved within 48 hours of the application being received into the team in Plymouth and 2018 saw the Insolvency Service issue approximately £312 million of debt relief – the largest amount for a single year.

A DRO normally runs for 12 months after which the debts are written off and between 2009 and 2017, while 64 per cent of DROs were granted to women, both genders experienced similar levels of average debt – £9,200 for women compared to £9,100 for men.

In the same period, 25 per cent of DROs were granted to people aged between 25 and 34. London experienced the lowest rate of DROs in every year since 2009 – 3 per 10,000 adults – compared to both the North East and South West where the average rate of DROs per 10,000 adults was 7.8.

Liz Thomas, head of debt relief orders for the Insolvency Service, said: “Reaching the 10-year anniversary since the first DRO was approved is a significant milestone and we are immensely proud of the role we have played in helping a substantial number of people out of debt.

DROs are a partnership with the debt advice sector who we have worked closely with during this past decade to ensure people are provided with every opportunity to lift themselves out of financial difficulties.

Paula Hogarth, DRO service debt advice centre manager for StepChange Debt Charity, said: “DROs are a good solution for people with minimal assets and low income who can’t afford to repay their debts.

“While it’s important that people get proper debt advice, as different circumstances lend themselves to different debt solutions, those people who are eligible for DROs definitely benefit from the relative speed, simplicity and low cost of setting up the solution, as well as usually becoming debt-free a year later.”

Diane Watson, debt relief order (DRO) liaison officer at PayPlan, added: “We have arranged DROs for a significant number of clients since they were introduced a decade ago and always fully assess clients before recommending debt solutions. So if a DRO is not suitable, we will work with them to help them regain control of their finances as part of a plan which is most suited to their individual circumstances.”