NEW Debt Relief Order Criteria
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
In the Spring Budget the surprise spotlight was on Debt Relief Orders (DROs), and significant positive changes are on the horizon for those in England and Wales suffering with debt on a low income. The elimination of the £90 fee and other positive changes will make a big impact.
Understanding Debt Relief Orders (DROs)
DROs are an insolvency option for people with no disposable income for debt payments and have minimal assets. Subject to strict criteria, successful qualification results in freezing debts for a year, potentially leading to wiping the debt if the financial situation remains unchanged.
This will impact your credit score but could help alleviate a difficult situation.
Key Changes
In the Spring Budget, Jeremy Hunt, the financial authority, revealed groundbreaking changes starting from April 6, 2024. The elimination of the £90 administration fee will help those unable to pay.
This streamlined process eliminates the need for laborious grant applications by debt advisers, offering substantial help to thousands annually.
Maximising Debt Relief
The debt threshold experiences a significant boost, escalating from £30,000 to £50,000. This means that if you’re in a lot of debt there’s a different solution other than having to resort to bankruptcy.
The adjustment ensures that those burdened with higher debts but lacking assets or disposable income for monthly payments can still access the benefits of DROs.
A Big Change in Car Value Limitations
Recognising the practical need for reliable transport, especially for essential shifts workers, carers and if you’re balancing work and childcare responsibilities, the car value limit doubles from £2,000 to £4,000.
Effective from June 28, 2024, this change is particularly impactful in areas with limited public transport or stringent emissions regulations.
Positive Changes for DRO’s
The removal of the £90 fee, the new debt threshold of £50,000, and the doubled car value limit to £4,000 collectively constitute positive developments. These changes are poised to make a substantial difference, providing much-needed help for those seeking financial reprieve through DROs.
Considerations for Further Improvement
While these changes are undoubtedly positive, some argue that an increase in the disposable income threshold from £75 could offer even more substantial assistance to DRO qualifiers. Nevertheless, the current changes mark a significant step forward in fostering financial relief for those in need.
