From 28 June 2024, the total amount of debt which can be covered by a debt relief order (DRO) will increase from £30,000 to £50,000 for non-home owners.

A DRO allows an individual to stop making payments towards debts (including interest) for 12 months, except for rent and bills. There is also a requirement to follow certain restrictions during that time, including not borrowing more than £500 without telling the lender about the DRO, and you cannot act as a director of a company.

Andrew Shore, assistant director of policy at the Insolvency Service said: ‘We understand how difficult things can be for people who are struggling with bills. That’s why the government is making it easier for people with debts they can’t pay back to access the help they need.

‘It’s difficult to know where to turn when dealing with debt, and we would always encourage people to talk to a regulated debt adviser as a first step.

‘If your debt adviser thinks a DRO might be the best solution for you, the new changes will help make it a more accessible option.’

As well as increasing the cap to £50,000, the current £90 administration charge will no longer be required, making the service free from 6 April.

‘We know that the fee was, for some, a barrier to dealing with their debts,’ said Stone. ‘Removing it is a big step forward in helping those most in need to find a sustainable solution that works for them.’

Another change from June is to increase the value of a car which can be owned by a DRO applicant from £2,000 to £4,000.

DROs cannot be used to alleviate student loans.

People struggling with debts may also be able to get support through the government’s free Breathing Space debt respite scheme. The scheme offers a 60-day break from the build-up of interest and other fees, and puts a pause on contact and enforcement action by creditors. Breathing Space is accessed through a regulated debt adviser.

Guidance, Options for dealing with your debts: Debt Relief Orders