The government is set to introduce legislation to expand the eligibility for debt relief orders (DRO) in an effort to support more people in getting out of problem debt.
Through the changes, the level of debt that people can apply for a DRO will increase from £20,000 to £30,000.
In turn it is expected that an additional 13,000 people will be able to use DROs over the coming year than in 2019, a two-year increase of almost 50%.
Set to be implemented on 29 June, the measures coincide with the end of the first 60 days of the recently announced Breathing Space scheme.
Lord Callanan, minister for corporate responsibility, said: “Debt relief orders help those with problem debt get to grips with their finances, these changes will enable more people experiencing problem debt to get a fresh start.”
Also included in the changes will be an increase in the threshold of asset values that a debtor can hold and still apply for a DRO from £1,000 to £2,000.
A single motor vehicle can now be disregarded from total asset value of up to £2,000, and the level of surplus income received by a debtor before creditor payments are made has been raised from £50 to £75 a month.
Introduced in 2009, a DRO freezes debt repayments and interest, with creditors unable to pursue debtors for a 12-month period, following which debts are written off.