April Sees Highest Number of Debt Relief Orders Taken Out Ever
The number of debt relief orders (DROs) taken out in England and Wales hit a record high in April, with 3,436 DROs recorded by the Insolvency Service. This surge in DROs marked a notable increase compared to previous statistics dating back to 2009 when DROs were first introduced. The spike in DROs can be attributed to the removal of a £90 administration fee required to obtain a DRO, effective as of April 6, 2024.
The removal of the administration fee was part of the changes announced in the 2024 spring Budget, aiming to make DROs more accessible by eliminating barriers for those struggling with debt. Additional changes to DROs are set to take effect in June, including an increase in the total debt covered from £30,000 to £50,000, and a rise in the allowable value of the vehicle owned by an individual entering a DRO from £2,000 to £4,000. These changes will be implemented starting June 28, 2024.
Moreover, a total of 9,651 individuals entered formal personal insolvency in England and Wales in April, indicating a 10 percent rise compared to the same period the previous year. This figure encompasses DROs, bankruptcies, and individual voluntary arrangements (IVAs). Among these, 648 bankruptcies and 5,567 IVAs were recorded in April.
Furthermore, the report highlighted that the number of IVAs in April remained consistent with figures observed over the past year, while bankruptcies were similar to the preceding nine months and slightly higher than in April 2023. Nevertheless, bankruptcy numbers still stand at approximately half of pre-2020 levels.
Notably, in April 2024, there were 7,649 registrations for breathing space, marking a 16 percent increase compared to April 2023. This scheme provides individuals with relief from accumulating interest and fees, as well as halting creditor contact and enforcement actions.
Tim Cooper, president of R3, a trade body for insolvency and restructuring, emphasized the growing need for debt advice and solutions, suggesting that many individuals are opting for protection from creditor actions or entering processes to negotiate debt repayments. Despite ongoing financial challenges and rising costs of living, consumer sentiment appears to be gradually improving.
