DRO's and pensions

debt_doctor

Hi all,

Sorry I've not been around much, I will be back!

Just to let you all know that there is to be an 'important announcement' re DRO's and pensions on the 19th November 2010, Hope it's good news.

DD

JCS1

Hope so! I suspect it was all an oversight to begin with..........

fermi

Fingers crossed.

Nice to hear from you DD. A lot of us were wondering where you had got to.

debt_doctor

Good early news !!!!!:beer:

From April 2011, Pensions in DRO's are to be treated the same as in bankruptcy ie it will be exempt as an asset if HMRC approved.:j

DD

fermi

Just seen that. Very good news.

http://nds.coi.gov.uk/content/detail.aspx?NewsAreaId=2&ReleaseID=416467

Edward Davey, Minister for Employment Relations, Consumer and Postal Affairs, today announced proposals to reform the Debt Relief Order (DRO) regime. The changes will allow debtors with an approved pension access to the DRO procedure.

Making the announcement Edward Davey said:

“This is good news for some of the most needy and vulnerable members of society who find themselves in inescapable financial difficulties. It is an important change. To deny people access to Debt Relief Orders because they have accrued some rights to a pension that they cannot yet access is simply unfair.”

The announcement follows a consultation launched in March this year, following debt advice agencies expressing concerns that DROs, (launched in April 2009), excluded some vulnerable people struggling with small debts. These debtors could not access the scheme because they had some pension rights, often of small value and not receivable for many years. The proposals will change the rules to allow those with rights to approved pensions access to DROs.

Commenting on forthcoming change Sue Edwards, Head of Consumer Policy at Citizens Advice said:

"We warmly welcome this announcement which will benefit those who fulfil most of the criteria for a DRO yet who were having their applications rejected because of very small pension funds, something that has been of great concern to us. However it is crucial that funding for face to face debt advice is continued if the most vulnerable people are to benefit.”

Malcolm Hurlston, Chair of the Consumer Credit Counselling Service said:

"For everybody in debt there needs to be a solution and the Debt Relief Order has already proved right for many of the least well off.

"We are delighted the Coalition government had moved swiftly to remove an anomaly which will open up the right solution to many more thousands of people in need."

DROs were introduced in April 2009 following research that identified that there were people in long term debt difficulties who had nothing to offer their creditors and who could not afford to make themselves bankrupt. Delivered in partnership with the professional debt advice sector, DROs provide low cost, easy access to debt relief for those overwhelmed by relatively low levels of unmanageable debt. They are designed to provide a fresh start for the most vulnerable people trapped in debt.

To use the DRO procedure individuals must meet a strict eligibility criteria of having assets valued at less than £300, debts no more than £15,000 and surplus income of less than £50 per month. Currently, if someone has a pension that is worth over £300, they are not eligible to apply, even if the pension is not receivable for many years.
The full Debt Relief Order Initial Evaluation Report can be viewed at:-
http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/con_doc_register/DRO%20interim%20evaluation%20report%20-FINAL.pdf

Chris1001

CABx are going to be very busy! All those clients turned away because they had a pension pot can now come back. Please form an orderly queue!

bat-out-of-hell

Hello all, good news, if i can hold the wolves at bay till april;):D

fermi

bat-out-of-hell wrote: »

Hello all, good news, if i can hold the wolves at bay till april;):D

Hi Bat.

Sounds hopeful then.

Penelope_Penguin

Chris1001 wrote: »

CABx are going to be very busy! All those clients turned away because they had a pension pot can now come back. Please form an orderly queue!

We have kept a list of all those people who weren't eligible for this reason, as we suspected that the rule would be changed, and we'd then be able to invite them back in April :j

Unfortunatley, if we lose our Financial Inclusion Funding, we won;t have the staff to be able to do this

Chris1001

Same for us. Our three DRO intermediaries all work under FIF, so they're not going to be around after March. Half our bureau's funding comes via FIF and over 80% of debt clients are helped by our FIF advisers. I don't know what we're going to do. Very depressed about it - bad news for our clients, our advisers and for our bureau.

Penelope_Penguin

Chris1001 wrote: »

Same for us. Our three DRO intermediaries all work under FIF, so they're not going to be around after March. Half our bureau's funding comes via FIF and over 80% of debt clients are helped by our FIF advisers. I don't know what we're going to do. Very depressed about it - bad news for our clients, our advisers and for our bureau.

Did I read that 90% of FIF caseworkers are DRO intermediaries?

You can file for your own bankruptcy, but you need an approved intermediary for DROs, so the DRO route will be pretty much cut off to most people after March

To register as a DRO AI needs at least 12 months' debt casework experience, DRO training, and an exam. So it's not even going to be a quick job to replace them, even if there's a long queue of people volunteering to do it.