- Increasing the financial eligibility criteria will
give more people access to debt relief orders and help
them get out of problem debt
- Research shows that more people are seeking debt
advice and are likely to require financial relief
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 said:
Suffering from financial difficulties places a huge
amount of stress on people’s mental health and wellbeing,
which is why we are committed to giving more people who
are struggling with debt a chance for a fresh start.
Debt Relief Orders are a valuable tool for supporting
vulnerable people to get to grips with their problem
debts. Our plans to increase the eligibility criteria
will mean many thousands more could benefit from this
help.
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:
Lower income households with few assets are among those
most deeply affected by debt during the pandemic.
Extending eligibility for debt relief orders will help to
give more people a chance to avoid the long-term misery
of being trapped by debt that they cannot afford to repay
over a reasonable period.
The consultation will run for 6 weeks and, subject to the
consultation any changes are anticipated to be put in place
in Spring 2021.
Notes to editors
- The consultation for increasing the eligibility
criteria for DROs is on GOV.UK
- More information about DROs and other
debt relief options
- DROs apply to England and Wales only (personal
insolvency is devolved to Scotland and Northern Ireland.)
The Money and Pensions
Service expects the demand for debt advice to increase
by up to 60% by the end of 2021 and this is likely to lead
to an increase in the need for debt relief.
Research by StepChange
indicates that compared to the 2008-09 recession,
households with low-to middle-incomes are entering the
present Coronavirus situation more likely to be facing
problem debt and struggling to pay for essentials.
In August 2020 Citizens Advice
estimated that 6 million UK adults have fallen behind on at
least one household bill during the pandemic, with 1 in 5
of those who have fallen behind on their bills unable to
afford essentials.
