Too deep in debt to break free? Why we need to simplify the solution…

This week we are sharing a story from CAP - Christians Against Poverty blog.

Too deep in debt to break free? Why we need to simplify the solution

My name is Laura and I work as a Senior Debt Advisor in the Insolvency Team at Christians Against Poverty. Our team helps those clients who simply can’t afford to repay their debts within a reasonable timeframe.

There are two main types of insolvency, if you live in England, Wales or Northern Ireland. Most people have heard of bankruptcy, but a Debt Relief Order, or DRO, is a form of insolvency for people with low incomes and few assets. This is for people whose budget is simply too tight to pay back their debts, and they don’t own much of value that they could sell towards repayments either.

Most of the clients we help in the Insolvency team fall into this category: on average they’d have spent 58 years paying back all their debts, so a DRO is a chance to get their lives and their finances back on track. However, we find that many low income clients are excluded from a DRO because they fall short of one or two criteria. (Join our campaign now to make DROs accessible to those who need them!)

During my time at CAP, I’ve experienced many challenging conversations with clients where I have to tell them that a change in circumstances means they are no longer eligible for a DRO. In these conversations I have to tell them that the fees for bankruptcy are seven times more than a DRO, costing £680 instead of £90. The discussion is never an easy one to have.

To continue reading this blog post, please visit the CAP blog page.