Millions urged to seek debt help now ahead of major changes to rules tomorrow

A CHARITY is urging millions to claim debt help ahead of two key changes coming tomorrow.

The National Debtline is reminding those struggling with their finances to take up a Debt Relief Order (DRO).

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You can get help with debt through a little-known method[/caption]

Under a DRO, debts are frozen for 12 months and during this time creditors are not allowed to contact you or ask for payments.

A creditor is a person or company you owe money to.

If you don’t pay off any debt owed within the 12 month window, it is wiped with any interest and charges also cancelled.

It used to cost £90 to take out a DRO, but this was dropped from the start of April.

Two further changes coming into effect from tomorrow mean those with debts worth up to £50,000 will be able to take out a DRO, from £30,000.

Meanwhile, the maximum value of a car or motorbike that someone can own when entering into a DRO will rise from £2,000 to £4,000.

Since the £90 fee for a DRO was removed in the Spring, registrations for the debt option have hit record levels.

However, new research from the National Debtline, which is run by the Money Advice Trust, shows an estimated 3.7million UK adults in debt have still never even heard of a DRO.

The charity‘s findings, based on a UK-wide Opinium poll of 2,000 adults, also reveal public awareness of the debt option is limited.

It found an estimated 25million people in total across the UK don’t know what a DRO is.

Steve Vaid, chief executive of the Money Advice Trust, said: “Too many people in financial difficulty, who may benefit from a Debt Relief Order, are unaware of their existence and the difference this option could make to their situation.  

“Facing bills and demands can be a stressful and lonely place and it’s vital people get the support they need to deal with their debts.

“A Debt Relief Order offers a safe route out of debt for people on low incomes who are in unmanageable debt.

“Changes that come into effect on June 28 mean more people will be eligible to access this debt option. 

“Not everyone will be eligible, but seeking free, impartial debt advice is a crucial first step.”

The Sun spoke to Londoner Paulette Marie Flash who revealed how she had £3,000 worth of debt wiped after taking out a DRO.

What is a Debt Relief Order?

A DRO freezes your debts for 12 months and means creditors will not be able to contact you about any money owed during the window.

If there is no improvement in your financial situation after 12 months, the debt is wiped completely.

You only qualify for a DRO if you have debt worth less than £30,000, although from tomorrow this threshold is rising to £50,000.

You won’t qualify if you have assets worth over £2,000, or a car or motorbike worth £2,000 or more. This is changing to £4,000 from tomorrow.

You also must have £75 a month or less spare income after paying for bills and other essentials.

You can also only apply for a DRO if you live in England or Wales, have lived in England or Wales in the last three years and have not had a DRO in the last six years.

You may still qualify if you submitted a request for a DRO in the last six years but it was cancelled.

You can’t take out a DRO if you have an IVA in place or if you’re going through bankruptcy.

An IVA is a separate type of debt relief arrangement where you pay back debts over time.

You can apply for a DRO through an approved debt adviser which you can find via the Government’s website.

If you live in Scotland or Northern Ireland you won’t qualify for a DRO, but should speak to a debt adviser about what to do.