Why this Insolvency Advisor wants a better DRO
I am an Insolvency Advisor and I think we need a better Debt Relief Order (DRO).
I am passionate about two things: anything numbers-related and helping people. That being said, I never expected that a job as a Debt Advisor would see me making the 200-mile move from London to Bradford. I had known about the work of Christians Against Poverty (CAP) for a while; I had even run the CAP Money Course at my church. I loved, and still love, the way CAP brings practical help to people who need it and so when the opportunity arose, I applied to join this brilliant organisation.
I’ve been a Debt Advisor in the Insolvency team at CAP for three and a half years now, and for the last two years I’ve been working as an Insolvency Advisor. I love being part of something bigger, knowing that I am part of an organisation that sees thousands of people become debt free each year. These are people I speak to daily, people who are struggling on low incomes, trying to make ends meet and put food on the table. That’s why I get up for work each day and why I love my job; I am playing my part to make a real difference in people’s lives.
As Debt Advisors, we can often get consumed by the day-to-day work and so we don’t get the opportunity to think about the bigger picture. However, that changed when I was invited to input my thoughts about DROs into CAP’s policy team. I had the opportunity to talk about some of the issues we frequently come up against, which fed into CAP’s latest report, Simplify the solution.
One of the best parts of my role is being able to call someone to tell them that they are debt free. You can hear the weight being lifted off their shoulders, the sound of relief in their voice — there’s nothing like it. However, sometimes I have to make tougher phone calls, where I have to tell someone they need to find £680 for a bankruptcy. These are people living on the breadline, so finding £680 is an impossible task.
Simplify the solution outlines some of the reasons why the DRO is not currently fit for purpose. This includes some of the monetary eligibility criteria, for example the debt, asset and vehicle limit, as well as the problems with ‘listed debts’.
One client I was working with, who went through a DRO, had been debt free for around six months and then suddenly a historic debt appeared. The client wasn’t aware she had it, and it wasn’t picked up on the credit reports, so we couldn’t have known — it was about £5,000. But because all debts need to be listed for a DRO application, she had no option but to go through bankruptcy because she was on such a low income she couldn’t repay. This meant she needed to find £680, on top of the £90 she’d already forked out for the DRO fee. It was a lot of stress for her, and just felt so unfair.
The £20,000 debt limit also bars some low income clients from a DRO. When a client is on a low income, with no assets, it makes little difference whether they become debt free via a cheaper DRO or more expensive bankruptcy. Either way there’s nothing to liquidate, no benefit to having a bankruptcy, except they have to pay almost seven times more for it. That’s why we want to see the debt limit raised to £50,000.
Simplify the solution also calls for a rise in the vehicle value threshold to £2,000. This would help low income households keep more reliable vehicles and help them avoid spending hundreds on repairs. It would also better reflect the price of cars, which has been creeping up over the last few years. As the rule currently stands, if you needed a DRO and had a vehicle valued at £1,500, you would need to sell it and buy a new one for £1,000 to meet the vehicle limit, but then could keep the £500 as a cash asset. At the same time, you then risk having to pay more in repairs later down the line if the car becomes unreliable. It just doesn’t make sense. It’s also really hard having conversations with clients who want to keep their reliable car, enabling them to go to work or take their children to school. I get it, it’s a risk to give up a reliable car and they could be left much worse off.
My job isn’t always easy. We see some of the toughest situations in the Insolvency team — people who have very little income, with debts they could never repay in their lifetime. And while, sadly, my job will be needed more than ever over the next few years, I wouldn’t swap it for the world. I am hopeful that things will change, that we will soon get a better DRO and in turn help more people access affordable debt relief.
