The rise of Debt Relief Orders – what leisure businesses need to do in 2026

Nichola Evans, Partner

Every year, Debt Relief Orders (DROs) leave UK businesses out of pocket on products or services already delivered. Below, we discuss steps businesses should take to avoid this.

A DRO is a formal solution for people with low income and few assets to manage unpayable debts by freezing most debt repayments for 12 months.

Over 2025, DROs have reshaped the personal insolvency landscape in England and Wales, with 2025 seeing the highest number of DROs since their introduction in 2009.

DROs are becoming more popular

• For the past 4 years, DROs have increased annually and they have reached their highest number in 2025 at 46,939.
• Whilst Individual Voluntary Arrangements remain the most popular option (57%), DROs now make up 37% of all individual insolvencies.

In short: DROs are easier to access and increasingly used by people with low income and minimal assets which is the precise demographic more likely to default on leisure-sector obligations such as gym memberships, class subscriptions, or hospitality related payment plans.

What does this mean for creditors in 2026?

• DROs are likely to remain high and could increase further in 2026 as DROs are more accessible than ever, cost of living pressures remain prevalent and there is increased familiarity in their use.
• For creditors, this increase in use is generally a negative sign because DROs provide limited prospects of recovery in litigation due to the following:
  • Once an individual obtains a DRO, creditors are required to stop all recovery action and the debt often ends up being non recoverable as a result.

Why this matters for leisure businesses?

Leisure businesses are more exposed as:

• Business models rely on small, recurring consumer payments.
• Customers are more likely to fall into arrears in economic downturns.
• Debt amounts are often too small to justify litigation.

What can businesses do to tackle this issue?

• Review internal credit controls and debt chasing procedures so businesses can act promptly to avoid losing recovery rights.
• Creditors should ensure that they remain advised on the most suitable avenues available to pursue recovery as soon as possible as there is greater exposure in litigation where the opponents are financially vulnerable.
• Work alongside legal professionals to assess pre-action risks and possible non recovery of legal costs.

At Kuits, our dispute resolution team regularly advise directors on the best approach to recovering liquidated sums. If you are seeking advice in this regard, please do not hesitate to contact our team on 0161 832 3434 to discuss how best we can support you.