Government help for people in debt

Source: Department for Business, Energy & Industrial Strategy | | 21/01/2021

New government proposals have been published that look at further extending debt solutions to help more people suffering from problem debts. The proposals specifically look at increasing the financial eligibility criteria for debt relief orders (DROs), helping more people deal with financial difficulties to get a fresh start.

A DRO is a special way of dealing with debts aimed at those with minimal assets and low income. If an application for a DRO is accepted, the claimant will usually make payments over a specified period (usually 12 months) after which any remaining debts will be written off. An application for a DRO must be made using an authorised debt adviser.

Research has shown that demand for debt advice could increase by up to 60% by the end of 2021.

The government is publicly consulting on changing the eligibility criteria to enter a DRO to:

  • increase the total amount of debt allowable to £30,000 (from £20,000)
  • increase the value of assets owned by the individual to £2,000 (from £1,000)
  • increase the level of surplus income to £100 (from £50) per month

The consultation will run for 6 weeks and, subject to the consultation, any changes are anticipated to be put in place in Spring 2021.

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



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