Consultation launched aimed at extending debt solutions and helping vulnerable people in financial distress get a fresh start.
Proposals have been outlined by the government to increase the financial eligibility criteria for debt relief orders (DROs), helping more people deal with financial difficulties to get a fresh start.
Research shows that the demand for debt advice could increase by up to 60% by the end of 2021 and around 3 million more people than before the pandemic will need support with problem debt 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
Business Secretary Kwasi Kwarteng said:
A DRO is a low-cost and easily accessible debt solution that helps vulnerable people. Delivered in partnership with the professional debt advice sector, DROs protect people from creditor action and after 12 months all debt within the order is written off.
Phil Andrew, CEO of StepChange Debt Charity, said:
The consultation will run for 6 weeks and, subject to the consultation any changes are anticipated to be put in place in Spring 2021.