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The suggested 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.
What Is A DRO?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.
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.
What Does A DRO Cover?Debts that can go into a DRO are called ’qualifying debts'. During the DRO period creditors can’t ask you for payments - if they do, you don't have to pay them. They include:•Credit cards, overdrafts and loans•Arrears with rent, utility bills, telephone bills, council tax and income tax•Benefits overpayments•Hire purchase or conditional sale agreements•Buy now - pay later agreements•Bills for services like vets or solicitors•Debts you owe to friends and family•Business debts
How Can You Apply?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 online to the Official Receiver on their client’s behalf.
For more information on this proposal, or other assistance with debt problems, please get in touch via our website or give us a call today.