By: PRLog
January 03, 2012 at 08:03 AM EST
25,000 people with Debt Relief Orders face bill for welfare loans, warns Debt Solutions Company
PR Log - Jan 03, 2012 - Social Fund loans are designed to help people with low incomes with emergency expenses, such as funeral costs, maternity grants, crisis loans, budgeting loans, community care grants and cold weather payments. Most of them are required to be paid back, but if a debtor has to take out a Debt Relief Order ordinarily Social Fund debt will be included.

If the plans go ahead, Social Fund loans will no longer be eligible for inclusion and debtors will have to pay back what they owe. Ministers say this is to prevent debtors deliberately attempting to avoid paying the loans back.

A spokesperson for Debt-Relief-Orders.co.uk said: “The whole point of someone having a DRO is that they cannot afford to pay their creditors what they owe. When you have no money, whether your debt came from credit cards or a social fund loan is immaterial. You can’t afford to pay back either, which makes this plan being proposed unworkable.”

DRO's are designed to last for a year and give an individual some breathing space and protection from their creditors if they cannot afford to pay their debts. Someone who has debt of £15,000 or less, assets of less than £300 and surplus income not exceeding £50 per month can gain some breathing space with a DRO to see if their financial situation improves. If not they are declared bankrupt, but rather than pay the normal £400-500 for doing so, debt relief orders lower this cost to just £90.

“Debt management solutions can take away the stress and pressure of unaffordable debt building up,” said the spokesperson. “What is being proposed by excluding social funds is putting 25,000 debtors under unnecessary pressure and stress to catch a few people who abuse the system. There are already systems in place to catch those who do and penalties to punish them, so why not just make those a lot tougher? It defies belief really.”

Ministers are also considering three other changes to the Debt Relief Order. The first would ensure anyone who obtains a job while under a DRO is not suddenly held liable for their debts again. The second who follow the example of Scotland and offer payment holidays to those who have a sudden drop in income. The third proposed change would lift the debt limit beyond £15,000 of unsecured debt.

“Debt Relief Orders only came into force in 2009 so it’s understandable that as time passes small changes are introduced to make the system more efficient,” said the spokesperson. “However, excluding Social Fund debt is a step too far and immediately negates the whole point of a DRO – which is RELIEF from debt to allow the individual time to pull themselves together financially or call it a day and go bankrupt. Why should the government be any different from all the other creditors in this situation and why should the debtor still face the pressure of unaffordable debt?”
- - -

Debt Relief Orders provide help and advice on the DRO debt solution. A DRO is a form of insolvency which is not at severe as filing for bankruptcy. See if you qualify now!

Read Full Story - 25,000 people with Debt Relief Orders face bill for welfare loans, warns Debt Solutions Company | More news from this source

Press release distribution by PRLog

Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here