A change to debt relief orders

Government plans to make more people eligible to apply for Debt Relief Orders (DROs), providing extra support for those in financial difficulty, have been announced by Business Minister Ian Lucas.

The proposed changes to DROs would mean that those with very small pension pots would be able to apply for the Orders, which are a new, lower cost option for people to avoid bankruptcy.

At the same time, as part of the annual fees review, the Government announced that changes will be made to the insolvency fees structure to ensure more cash is recovered earlier in the process so that the cost is shared between debtor and creditors.

Ian Lucas said:

“Debt Relief Orders help people who would otherwise be trapped in poverty to get back on their feet. Following representations from independent money advisers, we are proposing a common sense change to ensure that vulnerable people with a very small pension pot are treated fairly. The Government will consult on this change shortly.

“We have always made it clear that we expect those petitioning for bankruptcy to pay their fair share of the cost and that the taxpayer should not be responsible for the cost of bankruptcy. That is why, as part of our annual review, we have restructured the fees arrangements.”

The new charges will come into force from April 6th and details of the fees are available at www.insolvency.gov.uk, whilst free debt advice is available through Government funded agencies such as Citizens Advice.