DRO Limit to be increased to £20,000

fermi

https://www.gov.uk/government/news/improved-help-for-people-struggling-with-problem-debt

Changes announced today include:

• Bankruptcy creditor petition level to be increased to £5,000 from £750
• DRO limits raised to £20,000 enabling some 3,600 more people with low level debt to use DROs instead of the more expensive and onerous bankruptcy process
• DRO asset limits raised to £1,000, plus a vehicle (worth not more than £1,000)
• The maximum surplus income a person can have to qualify for a DRO will remain at £50 per month
• A light touch monitoring of the intermediaries to maintain consistency.

http://www.independent.co.uk/money/bankruptcy-rules-to-change-business-minister-announces-9979919.html

There’s good news for people struggling in debt - the minimum amount for which you can be forced into bankruptcy is being raised from £750 to £5,000. The limit was last set in 1986 and the new rules will come into effect in October, Business Minister Jo Swinson announced this morning.

At the same time the maximum amount of debt that can be covered by Debt Relief Orders – the low-cost alternative to bankruptcy - will increase from £15,000 to £20,000.

Jo Swinson said: "Struggling with unresolvable debt can cause immense stress for families. These changes will ensure that our debt relief schemes are updated so that they still meet their original goal of providing access to those who need them. They also ensure that bankruptcy, which has the most significant consequences, is reserved for those with sizeable debts."

The move marks the culmination of a long campaign by debt charities and insolvency firms and follows a call for evidence launched by the Minister last August.

DorisTrousers

Overall, a step in the right direction I think.

Very glad that the car valuation has stayed at £1K, although I know some advice agencies wanted an increase on that to £2k. Seems some form of common sense may have finally broken out, although experience tells me not to expect it to last too long.

SPELLKASTER

My total overall level of debt is £11,161.

Good news for me!!

fatbelly

Changes announced today include:
•Bankruptcy creditor petition level to be increased to £5,000 from £750
•DRO limits raised to £20,000 enabling some 3,600 more people with low level debt to use DROs instead of the more expensive and onerous bankruptcy process
•DRO asset limits raised to £1,000, plus a vehicle (worth not more than £1,000)
•The maximum surplus income a person can have to qualify for a DRO will remain at £50 per month
•A light touch monitoring of the intermediaries to maintain consistency.

https://www.gov.uk/government/news/improved-help-for-people-struggling-with-problem-debt

http://www.parliament.uk/documents/commons-vote-office/January%202015/15%20January/2-BIS-Insolvency.pdf

Comes into effect 1 October

Why this needs an 8-month lead I don't know. That's my main disappointment as I hoped we would get some changes for April.

And I was hoping for a bigger increase in the threshold, but 5k extra is welcome

Depth_Charge

DorisTrousers wrote: »

Overall, a step in the right direction I think.

Very glad that the car valuation has stayed at £1K, although I know some advice agencies wanted an increase on that to £2k. Seems some form of common sense may have finally broken out, although experience tells me not to expect it to last too long.

Hi

A step in the right direction, yes, just about! any further steps may be a long time coming.

Not sure I agree with you on the £1K it should have at least increased a touch.

The £20,000 was not unexpected on the debt circuit as you no doubt knew, its not high enough however it should have at least £25,000 IMO. The potential implications of a bigger rise played a part in my opinion and the increase to £20,000 will not come into effect for a while which again comes as no surprise to some of us:)

You will probably be right on the common sense not lasting too long:)

My take as always

A DRO I

DC

Depth_Charge

fatbelly wrote: »

Changes announced today include:
•Bankruptcy creditor petition level to be increased to £5,000 from £750
•DRO limits raised to £20,000 enabling some 3,600 more people with low level debt to use DROs instead of the more expensive and onerous bankruptcy process
•DRO asset limits raised to £1,000, plus a vehicle (worth not more than £1,000)
•The maximum surplus income a person can have to qualify for a DRO will remain at £50 per month
•A light touch monitoring of the intermediaries to maintain consistency.

https://www.gov.uk/government/news/improved-help-for-people-struggling-with-problem-debt

http://www.parliament.uk/documents/commons-vote-office/January%202015/15%20January/2-BIS-Insolvency.pdf

Comes into effect 1 October

Why this needs an 8-month lead I don't know. That's my main disappointment as I hoped we would get some changes for April.

And I was hoping for a bigger increase in the threshold, but 5k extra is welcome

Hi

I agree with you on the threshold increase

Really interesting point on the delay, I can think of a few potential reasons

Also there are issues here now with people on existing debt management plans & maybe other solutions who may now become eligible for a DRO - I will mention the CFS for old times sake

Issues for advisers and people seeking debt advice (new enquiries or not currently engaged in a debt solution) on what solution to advise / take both short and long term given the change dates.

Just my take again

DC

wba31

Depth_Charge wrote: »

Hi

A step in the right direction, yes, just about! any further steps may be a long time coming.

Not sure I agree with you on the £1K it should have at least increased a touch.

The £20,000 was not unexpected on the debt circuit as you no doubt knew, its not high enough however it should have at least £25,000 IMO. The potential implications of a bigger rise played a part in my opinion and the increase to £20,000 will not come into effect for a while which again comes as no surprise to some of us:)

You will probably be right on the common sense not lasting too long:)

My take as always

A DRO I

DC

There will be another review in 2017 so we'll see what happens then with the debt total. the only thing i expected was £1500 maybe £2k on a car. I would like to know more of the reasons behind some changes and non-changes...

fermi

Have yet to read the consultation responses, but maybe that sheds some light?

https://www.gov.uk/government/consultations/insolvency-proceedings-review-of-debt-relief-orders-and-the-bankruptcy-petition-limit

original consultation here with the data presented to respondents here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/341089/Insolvency_Proceedings__Debt_relief_orders_and_petition_limits_v3.pdf

DorisTrousers

Depth_Charge wrote: »

Hi

A step in the right direction, yes, just about! any further steps may be a long time coming.

Not sure I agree with you on the £1K it should have at least increased a touch.

The £20,000 was not unexpected on the debt circuit as you no doubt knew, its not high enough however it should have at least £25,000 IMO. The potential implications of a bigger rise played a part in my opinion and the increase to £20,000 will not come into effect for a while which again comes as no surprise to some of us:)

You will probably be right on the common sense not lasting too long:)

My take as always

A DRO I

DC

The reason I am happy about the car limit not being increased is mainly because of the potential for another anomaly in the comparison with Bankruptcy. Whilst every OR is different to a point, it is fair to say that most would not be overly concerned with trying to raise funds through a car valued at under £1k. The situation in BR re a possible £2k car is, as you know, completely different. Some OR's still wouldn't be interested but an awful lot would. Add that to the existing anomaly re affordability, i.e. £40 D.I. means no payments in a DRO but potentially 3 years through an IPA and that may make a little more sense. Does from where I'm sat anyway, although everyone is entitled to their own view.

Maybe raise the threshold next time to £1,500, that would seem a sensible compromise.

Depth_Charge

wba31 wrote: »

There will be another review in 2017 so we'll see what happens then with the debt total. the only thing i expected was £1500 maybe £2k on a car. I would like to know more of the reasons behind some changes and non-changes...

Hi

See what happens 2017 it is then

£1500 on the car would have been reasonable and right - the bankruptcy issue on vehicles as mentioned by Dorist is a good point & bit of a paradox however the £1000 valuation is hopelessly out of touch as far as bankruptcy is concerned and should have been upped to £2000 plus years ago.

No doubt there will be more discussion on the reasons and it will probably 'all come out in the wash' as they say round my way.

Very interesting nonetheless

My views

DC

Depth_Charge

DorisTrousers wrote: »

The reason I am happy about the car limit not being increased is mainly because of the potential for another anomaly in the comparison with Bankruptcy. Whilst every OR is different to a point, it is fair to say that most would not be overly concerned with trying to raise funds through a car valued at under £1k. The situation in BR re a possible £2k car is, as you know, completely different. Some OR's still wouldn't be interested but an awful lot would. Add that to the existing anomaly re affordability, i.e. £40 D.I. means no payments in a DRO but potentially 3 years through an IPA and that may make a little more sense. Does from where I'm sat anyway, although everyone is entitled to their own view.

Maybe raise the threshold next time to £1,500, that would seem a sensible compromise.

Hi

I take your points

As my previous post, the car valuation as far as bankruptcy is out of touch, needs upping, this area in my opinion can and does stop people going down the bankruptcy route when it would be their best solution. What is the point in making it difficult for someone employment & other essentials travel wise. The valuation actually went down as far as I can remember

My view

DC