March 2021
Dear Constituent,
Thank you for contacting me about problem debt and debt relief orders.
Problem debt is often difficult to escape and can have a devastating impact on existing issues including family problems and poor mental health. It is only right that people who fall into problem debt are helped to find a sustainable, long-lasting plan to solve their debt problems. I am assured that the Government takes this issue very seriously and I welcome the action being taken to protect those with problem debt through a new breathing space scheme.
This scheme will have two parts; a breathing space period and a statutory debt repayment plan. Together, these two aspects of the scheme will protect debtors from creditor action, help them get professional advice on their debt problems, and help them pay off their debts in a sustainable way. Colleagues in the Treasury have already started work on this scheme by investing an additional £12.5 million in throughout 2020-21 in order to implement breathing spaces as soon as possible.
I agree with you that Debt Relief Orders (DROs) are valuable tools which provide relief to those with low levels of unmanageable debt, limited assets and minimal surplus income. A DRO is designed to be an easily accessible means of managing debt, delivered in partnership with the professional debt advice sector to protect people from creditor action. After 12 months, all debt within the order is written off.
I welcome Government plans to increase the financial eligibility criteria for DROs to ensure that vulnerable people are helped in getting to grips with problem debt. I know my ministerial colleagues are committed to ensuring that this help reaches as many people as possible and I will continue to engage with them on this matter.
On the wider issue of helping those who find themselves in problem debt, I am pleased that an extra £37.8 million support package has been made available to debt advice providers this year and the government-commissioned Money Advice Service is spending over £56 million to provide debt advice to over half a million people in the same period.
Thank you again for taking the time to contact me.
With best wishes.
Kind regards,
Jonathan Lord MP
Member of Parliament for Woking