Borrowers being chased for debts protected by Debt Relief Orders

March 3, 2015

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By Lucy Palmer-Richeson

A new report has shown that many creditors are acting unlawfully by chasing debts that are covered by Debt Relief Orders (DROs).

DROs were introduced to help people who are low income and do not have assets; they help by cancelling out some debts and postponing others, such as magistrate fees and sometimes rent.

However, according to the report published by Citizens Advice, 85% of the charities’ advisors report that their clients are being chased for repayment of loans, despite them being listed in the DRO.

An additional 25% of advisors said that clients are being asked to top up their energy meters in order to pay fuel debts. Surprisingly, a further 25% of advisors report they had seen a client’s bank account closed, despite no debt being owned to the bank, simply because a DRO was in place.

Gillian Guy, chief executive of Citizens Advice, explained: “A Debt Relief Order is a last resort for people with serious money worries.  It offers people a chance to get back on their feet and move towards a financially secure future.  Poor practices from creditors have meant that not everyone is feeling the full benefits of this debt remedy.”

She continued: “Some creditors are doing a really good job in supporting people with DROs by setting up special teams to help with insolvency queries and communicating every step of the way. But there is still a long way for some firms to go and we encourage them to learn from other companies’ successes.”

Analysis of the report showed that people who have a DRO in place have an average of 10 debts, and the average wage for those with a DRO is less than £1,500 a month.

Citizens Advice report that they helped with 127,000 issues related to DROs in 2014.