DROs were introduced last April with the aim to help people in England or Wales who have few valuable assets, little surplus income and relatively low debts (not more than £15,000). To enter a DRO, borrowers` total value of assets must not exceed £300 (though they can possess a car worth not more than £1,000).

Yet, the`total value` comprises any pension pot borrowers may have, and this has prevented many people from using a form of insolvency that would turn out to be a beneficial way of managing their debts.

Sue Edwards, Citizens Advice Head of Consumer Policy reported that there was much concern that applicants who met most of the DRO conditions failed to enter this form of insolvency on the grounds of too small pension funds.

She added that a recent survey had shown that 96.3% of the respondents couldn’t enter the DRO just because of their pension, and the pension pot of 78% of them didn’t exceed £5,000."

At the moment, the Department for Business is seriously thinking about introducing changes to the way DROs work to improve the situation. Business Minister Ian Lucas claims that following the example of independent money advisers, he is suggesting a reasonable change to guarantee that vulnerable people with a tiny pension fund get a fair treatment.

Since their introduction, 11,831 people have entered a DRO to unburden themselves of debts. In the meantime, 54,224 people in England and Wales have gone bankrupt, and 37,834 have been subject to an IVA (Individual Voluntary Arrangement).


The cultural transformations that have made people accept life in debt have had a direct impact on the approach youngsters take to money matters, which could lead to negative consequences in the long run as many of the next generation would resort to IVAs to cope with serious financial issues.

When we put efforts into our work and get paid for this, we get an amazing feeling of satisfaction. Our hard hard work seems to have been remunerated financially. We go shopping and buy the items we need and the items we simply want.