THOUSANDS of households struggling with debt are set to benefit from a huge change coming within days.
The Insolvency Service is to scrap the £90 charge for getting a debt relief order at the beginning of April.
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A debt relief order is a quick alternative to declaring bankruptcy in England and Wales, allowing people to get their debts written off if they can’t afford to repay them.
The announcement was made in the Chancellor’s Spring Budget earlier this month and it will come into effect on April 6.
Credit counselling service Money Wellness said the change will help 40,000 of the most financially vulnerable households in the country.
David Cheadle, acting chief executive at National Debtline, said: “The Chancellor’s changes to Debt Relief Orders – something we have long called for – will make a significant difference for many struggling households.
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“By removing the fees for these, alongside other eligibility changes, many more people will be able to access this vital debt solution.”
Meanwhile, Martin Lewis said the fee acts as a “barrier to people who needed help getting help” and he is “very pleased to see the charge gone”.
The government is also raising the maximum debt value threshold from £30,000 to £50,000 and increasing the maximum value of motor vehicle that an individual can retain from £2,000 to £4,000, from 28 June 2024.
There is no need to pay for debt advice as there are charities and organisations backed by the government to give free help.
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Using these services can give an overview of the options available to you or provide some tips on how to get in control of your finances.
Most of them can offer you free guidance and help in person, over the telephone or online.
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As well as Money Wellness, you can also contact:
If you are finding that is affecting you mental health, you can also talk to someone from charities Mind and Samaritans.
How to get free debt help
THERE are several groups which can help you with your problem debts for free.
- Citizens Advice – 0800 144 8848 (England) 0800 702 2020 (Wales)
- StepChange – 0800138 1111
- National Debtline – 0808 808 4000
- Debt Advice Foundation – 0800 043 4050
You can also find information about Debt Management Plans (DMP) and Individual Voluntary Agreements (IVA) by visiting MoneyHelper.org.uk or Gov.UK.
Speak to one of these organisations – don’t be tempted to use a claims management firm.
They say they can write-off lots of your debt in return for a large upfront fee.
But there are other options where you don’t need to pay.
What is a debt relief order?
A debt relief order will freeze your debt for 12 months. And creditors will not be able to contact you about money owed during this time.
If there is no uplift in your financial situation after the year, the debt is wiped off.
The arrangement is only an option if you owe less than £30,000.
And you won’t qualify if own your home or another property .
You will need to show that you have £75 or less left over each month after paying for bills and other essentials.
You must not have have savings or a single possession worth more than £2,000.
You can’t take out a DRO if you have an IVA in place or if you’re going through bankruptcy.
And you can only go through one DRO in six years.
You can only apply for a DRO through a specialist DRO adviser.
This professional person will have the skills and permission to complete forms, as well as give advice on DROs.
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This person can then check you qualify and that a DRO is right for you.
The free debt charities can signpost you to a specialist adviser.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories.
