In the Spring Budget recently delivered by Chancellor Jeremy Hunt, changes to Debt Relief Orders (DROs) were announced, which is welcome news to thousands of people struggling with problem debt.
What is a Debt Relief Order (DRO)?
A Debt Relief Order (DRO) is a way to have your debts written off. It effectively freezes your debts for 12 months, and if your financial situation doesn’t improve in that time, you don’t need to pay anything back.
While a DRO can be the right option for many, it’s worth bearing in mind it will have an effect on your credit file and will be visible for 6 years.
Who Can Get a DRO?
A Debt Relief Order is only available to individuals who have very little disposable income to pay their debts (£75 or less a month). It also might be suitable if you:
- Have a relatively low level of debt
- Aren’t a homeowner
- Don’t have many assets
What Are The Changes to DROs?
No fee – From the 6th April
Currently, there is a £90 fee payable to the Insolvency Service to apply for a DRO. People who are in need of a DRO find it difficult to find the £90 to pay the fee and may even be in a negative budget. It’s welcome news and will help thousands of people a year.
Increase to maximum debt – From the 28th June
To get a Debt Relief Order you must have a maximum debt level of £30,000. Anyone over that limit would have to apply for bankruptcy which costs £680. From the 28th June, the maximum debt level will increase to £50,000.
Permitted car value doubles – From the 28th June
Currently, if your car is worth more than £2,000, you wouldn’t be eligible for a DRO. A car is essential for many people on low budgets and isn’t a luxury. However, from the 28th June, that will increase to £4,000.
Get in Touch For Debt Help
If you need support with your finances, the friendly and experienced debt advisors at Angel Advance can help. We help people daily with their financial goals, offering no-obligation debt advice day and night! Visit our online debt advice tool for help with debts, or contact our team via email, phone or WhatsApp today.
