Debt Relief Orders to receive "common sense" change
Consultation launched by business minister to reconsider pensions as assets for debt option
Future Debt Relief Orders (DROs) could be changed so that pensions are not
considered an asset, according to the Insolvency Service.
A consultation was launched today by business minister, Ian Lucas, to change
DROs to increase the take up of the repayment option aimed at those on lower
incomes and levels of debt who cannot afford either a bankruptcy or Individual
Voluntary Arrangement (IVA).
DROs are aimed at people with debts of no more than £15,000 and assets of
less than £300 and a surplus income of less than £50 per month. Currently anyone
with a pension of more than £300 is ineligible to apply for a DRO as this is
considered an asset.
Pensions are not included as assets in either a bankruptcy or IVA.
“Debt Relief Orders are a low cost and effective way of avoiding bankruptcy
and since they’ve been introduced they have already helped some of the most
vulnerable people in debt sort out their finances. Today we are consulting on a
common sense change to make these orders more accessible to the people they were
designed to help,” said Lucas.
Last year there were many critics towards the decision to include pensions as
assets with Begbies Traynor personal insolvency partner, Joanne Wright calling
it a “real oversight”.
“One in eight of our clients are denied access to DROs, often due to a small
pension fund which is unlikely to be realised for many years,” said Malcolm
Hurlston, chairman Consumer Credit Counselling Service.
Last year there were more than 11,000 DROs were approved since its
introduction in April 2009.
Further reading:
Take
up of new debt relief orders disappointing, say IPs
Fourth
quarter insolvency statistics
