Good news — higher DRO limits from end June 2021!

Citizens Advice Doncaster Borough welcomes changes to rules which offers more residents of the borough a way out of living with debts.

By James Woods — Operations Manager

“ Changing the criteria for Debt Relief Orders will give more people in Doncaster the option to tackle debts from credit cards and loans, as well as everyday bills like utilities and council tax, for just £90.”

James Woods Operations Manager.

The Insolvency Service has announced the new limits that will be introduced for Debt Relief Orders (DROs) from 29 June 2021.

These are:

• the total debt allowable in a DRO goes up from £20,000 to £30,000.
• the level of “surplus income” after paying your bills and everyday expenses has been increased from £50 to £75 per month.
• an increase in the general assets you can have from £1,000 to £2,000.
• an increase in the value of a car from £1,000 to £2,000 (this is in addition to the general assets you can have.)

This is very good news. The Insolvency Service expects they will allow over 13,000 more people a year to go through the cheaper, simpler DRO route rather than having to go bankrupt or opt for an expensive IVA where there is a very high failure rate.

DROs have restrictive eligibility criteria, including several financial limits. These criteria were widened in 2015, but by the start of 2020, it was already clear that they again needed to be revised. Debt advisers were seeing clients who were failing to meet some of the DRO eligibility criteria but for whom a DRO should be the natural debt solution as they could not make realistic payments to their creditors in bankruptcy or an IVA.

The pandemic has now made this more urgent. A form of insolvency is likely to be the best option in 2021 and 2022 for thousands more people than would have needed this is a normal year.

From 29th June, if you can’t pay debts of up to £30,000, don’t own your own home, and don’t own assets worth more than £2,000, a debt advisor might be able to help you get a Debt Relief Order. This option is a real lifeline to people struggling with debts.

To be eligible, you need to have very little surplus income left after paying your essential costs every month.A Debt Relief Order usually lasts a year and you won’t have to make any payments towards most debts during that time other than the £90 fee. If your situation hasn’t improved when the Debt Relief Order ends, most of your debts will be written off.

James Woods, Operations Manager at Citizens Advice, said “With many more people likely to be struggling with unmanageable debt because of the pandemic, this is a welcome change. If you would like to discuss this or any debt option open to you please contact our debt team.”

Please call the the debt team to book an appointment — (01302) 499330

Or for advice call our Debt Adviceline Freephone -: 0800 240 4420

Video Appointment link: https://attenduk.vc/CADB-waiting-room