You could write off £ 30,000 in debt with a new government plan
More people in serious financial difficulty could be helped to make a fresh start under the government’s proposals to expand the eligibility criteria for Debt Relief Orders (DROs).
DROs are a type of formal personal insolvency in England and Wales, alongside bankruptcies and IVAs (Individual Voluntary Agreements).
Tellers tend to be a low-cost solution for people who have smaller debts but have no realistic prospect of paying them off. They protect people against the action of creditors and after 12 months the debts under the order are canceled.
The government is consulting on proposed changes to scrutineers which would increase the total maximum debts allowed from £ 20,000 to £ 30,000.
The maximum value of assets that could be owned by one person under the DRO eligibility criteria would be doubled from £ 1,000 to £ 2,000.
People could also be allowed to have more excess income depending on the eligibility criteria, at £ 100 per month instead of £ 50 currently.
The government said research indicates that demand for debt advice could increase by up to 60% by the end of 2021 and that about three million more people than before the coronavirus pandemic will need it. ” support for debt problems by the end of 2021.
Business Secretary Kwasi Kwarteng said, “Suffering from financial hardship puts enormous strain on people’s mental health and well-being – that’s why we are committed to giving more people struggling with challenges. debts a chance to make a fresh start.
“Debt relief orders are a valuable tool in helping vulnerable people deal with their problematic debts. Our plans to increase the eligibility criteria will mean that several thousand more could benefit from this aid. “
Phil Andrew, Managing Director of StepChange Debt Charity, said: “Low-income households with few assets are among the hardest hit by debt during the pandemic.
“Expanding eligibility for debt relief orders will help give more people a chance to avoid the long-term misery of being trapped by debts they cannot afford to repay over a period of time.” reasonable. “
The consultation will last for six weeks and any potential changes are expected to be in place in spring 2021.