I’ve racked up £12,000 of credit card and payday loan debt – an ‘unfair’ fee will help others like me get back on track Achi-News

Borrowers who have trouble repaying bills can write off all their debt with an unknown method – and now it comes with no fee.

Josh Mance, from Derby, racked up an eye-watering £12,000 worth of debt over a 12-year period, starting when he was just 18.

1

But with the help of Money Wellness – an organization backed by the Government’s Money and Pensions Service (MaPS) – the 30-year-old realized he could be eligible for a Debt Relief Order (DRO).

As part of these arrangements, debts are frozen for 12 months and during this time creditors are not allowed to contact you or request payments.

A creditor is a person or company to whom you owe money.

If your financial situation has not improved after 12 months, the debts are completely written off.

Before today, it cost £90 to set up the DRO and this fee had to be paid within 28 days.

But in last month’s Spring Budget, Chancellor Jeremy Hunt announced that the toll would be scrapped on April 6.

Dad-of-one Josh tried to save to afford to pay for a DRO but found it was “impossible”.

“£90 might not seem like a lot to some people, but it happens when you’re struggling,” he said.

He has now praised the decision to scrap the £90 charge, telling The Sun: “I was trying to save the £90 but I was nervous about it because the only income I have is my universal credit.

“Getting rid of the fee will give people peace of mind knowing they have a chance to get things sorted.

“It was another unfair obstacle to getting out of debt – and it’s finally gone.”

“I felt like I was in a deep pit”

Josh could not afford to pay back the £12,000 he owed or stick with his repayments to his creditors.

At the same time, several companies contacted him regarding the debt they face, including credit card companies, mobile phone providers and payday lenders.

At his lowest point, Josh struggled with drug addiction and found himself on the streets because he couldn’t afford to pay rent.

But in June 2023, he was offered supported accommodation free of drugs and alcohol.

Getting rid of the commission will give people peace of mind

Josh Manns

However, although he moved on and got his act together, his debts caught up with him and he began to be bombarded by creditors so often that he “couldn’t see a way out”.

He said: “It all just came over me – I was so in debt and deep in my addiction and I ended up homeless.

“It just felt like I was in a deep hole until I made the right decision to go into supported accommodation.

“But then I started getting letters from creditors and credit unions asking for their money back, and then I knew I had to do something about it as soon as possible.

“So I made the decision to ask for help and found Money Wellness.”

Money Wellness offers free debt counseling. A consultant went over Josh’s debts as well as his income and expenses and determined that he could benefit from a DRO.

In the end, his fees were covered by the MaPS as it agreed to cover the fees for those struggling between the announcement of the spring budget on March 6 and the change that comes into effect today.

Josh’s DRO was finally approved on March 22nd.

“I was absolutely over the moon,” he said.

“Now I can think about my future and leave a supported residence.

“In the long term, I want to get on the property ladder and own my own home.

“I feel like I have a new life and that I can finally take control of my finances.”

Money Wellness said removing the DRO fee would help the country’s 40,000 most financially vulnerable households.

It also found that around 44% of those eligible for a DRO in the past year could not afford to pay the £90 fee within the required 28-day period.

Sabrina McCullough, external relations manager at Money Wellness, said: “The cost of living crisis has seen a rise in people needing help from DROs, leading to a 31% increase in applications last year – the highest figures seen since they were introduced in 2009.

“The removal of the fee, along with the other changes to the properties, will be significant and will mean that more people will be able to access the solution sooner.

“Prior to the changes we regularly saw people – who were often in dire straits – having to save for two months or more, or apply for grants, to be able to afford the payment.

“Now they will be able to get help immediately.”

What is a debt settlement order?

A DRO will freeze your debts for 12 months. Any creditors will not be able to contact you about money owed during this period.

If there is no increase in the financial situation after the year, the debt is completely erased.

Settlement is only an option if you owe less than £30,000.

And you won’t be eligible if you own your home or other property.

You will also need to show that you have £75 or less left each month after paying bills and other essentials.

And you must not have any savings or one property worth more than £2,000.

You cannot take out a DRO if you have an IVA in place or if you are going through bankruptcy.

An IVA is a separate type of debt arrangement where you repay debts over time.

You can only go through one DRO in six years and you only apply through a specialist DRO consultant.

This professional person will have the skills and permissions to complete the forms, as well as give advice on DROs.

They can then check that you qualify and ensure that a DRO is right for you.

Debt free charities can refer you to a specialist adviser.

Meanwhile, one woman told us how she was £30,000 in debt after her husband died – and how a little-known method helped her clear it.

Plus, here’s a list of places where you can get free debt help.

Do you have a money problem that requires sorting? Get in touch by emailing [email protected].

Additionally, you can join the Sun Money Chats and Tips Facebook group to share your tips and stories