From 28 June 2024, the limit for debt covered by a Debt Relief Order (DRO) for individuals who do not own a home will rise from £30,000 to £50,000.
A DRO halts payments on debts, including interest, for 12 months, apart from rent and utility bills. It imposes certain conditions, such as not borrowing over £500 without disclosing the DRO to the lender and prohibiting acting as a company director.
In addition to raising the debt limit to £50,000, the existing £90 application fee will be abolished from 6 April, making the process free. DROs, however, cannot be applied to student loans.
Those facing financial difficulties may also find assistance with the government's free Breathing Space scheme. This scheme grants a 60-day period of relief from accruing interest and additional charges, and also suspends creditor contact and enforcement actions.
Access to Breathing Space is available through a certified debt adviser.
Andrew Shore, assistant director of policy at the Insolvency Service said:
"We understand how difficult things can be for people who are struggling with bills. That's why the Government is making it easier for people with debts they can't pay back to access the help they need."
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