ADVICE NI CALLS FOR NORTHERN IRELAND TO CHANGE DEBT RULES
Advice NI has said Northern Ireland must follow new Debt Relief Orders (DROs) rules applied this week in England and Wales – transformative measures for those facing the burden of debt. In his spring budget, the Chancellor announced the removal of the £90 administration fee associated with Debt Relief Orders (DROs) and increased the maximum debt threshold from £30,000 to £50,000 – whilst also increasing the allowable value of retained motor vehicles from £2,000 to £4,000 - across England and Wales.
A DRO is a legally binding agreement between individuals and creditors, preventing further action to recover debts. After one year, debts are written off and the application process is facilitated through approved intermediaries. The current debt threshold for DROs in Northern Ireland is now less than half of the threshold in England and Wales at £20,000 and has not been increased since 2010. Whilst the current allowable value of vehicles is up to £2,000.
The removal of the DROs charge was widely welcomed across England and Wales, and Sinead Campbell, Head of Money Debt and Quality at Advice NI, has expressed grave concern for people in debt, as Northern Ireland now lags behind with outdated debt relief measures.
Sinead said, "While England and Wales are taking significant steps to support those grappling with debt, the absence of parallel measures in Northern Ireland is deeply troubling. Individuals here still face a £90 fee when applying for a DRO – needless to say this can be a daunting hurdle for people facing debt. This fee remains unchanged whilst some the wider UK embraces a fee-free approach, potentially leaving vulnerable individuals in Northern Ireland without a necessary financial lifeline.
“Additionally in Northern Ireland the maximum debt value threshold for DRO applications is capped at £20,000, and has been since its introduction in 2010. In stark contrast, England and Wales have adapted to the ongoing cost of living crisis by increasing their thresholds to £30,000 during the pandemic and now to £50,000, in line with inflation.
“Northern Ireland needs to mirror the progressive measures taken in England and Wales. By eliminating the £90 DRO fee and raising the debt value threshold, Northern Ireland can provide a lifeline for those struggling with debt, offering them a chance at a fresh start amid these challenging economic times.”
Qualifying debts with a DRO include arrears with rent, utility bills, telephone bills, council rates, income tax, outstanding borrowing on credit cards, loans and overdrafts, business debts, and money owed to friends and family. There is no requirement to make payments towards most types of debts included in a DRO, and creditors cannot force individuals to settle debts. Typically lasting one year, a DRO offers a pathway towards financial recovery.
Advice NI is urging households and businesses facing financial difficulties to proactively seek support and get in touch with its free, impartial, and confidential Debt & Money Service.
Advice NI and its members have dealt with over 4,062 cases of personal debt in the last twelve months, managing over £43.3M, signalling that there is often an available solution for people struggling.
Get in touch by calling the freephone helpline on 0800 915 4604 to speak directly to an adviser between 9:00am and 5:00pm Monday to Friday or visit adviceni.net