Citizens Advice has called for upfront fees to be abolished for those trying to get out of debt, saying that no-one should be "priced out of a fresh start".
The charity said that the fees involved when it comes to clearing large amounts of debt, such as through a debt relief order (DRO) or declaring bankruptcy, act as an "in-built barrier" for those who are most in need. A DRO costs £90 upfront, while declaring bankruptcy comes with a cost of £680.
In a new report, Citizens Advice insisted that the payments "simply aren't affordable for people in deep debt distress", as they will typically not have the spare cash to pay upfront fees. The charity, who said that it helped more than 320,000 people with debt problems last year, added that the majority trying to legally write off their debts struggle to pay the fees involved.
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According to research from Citizens Advice, one in four adults across England and Wales are in debt. The charity has now called on the Government to scrap the fees, writing in its report: "Government must take action now to stop charging for debt relief, so no-one is priced out of a fresh start."
It also warned that leaving people trapped in debt has a series of knock-on effects, including creditors being left "chasing money that can never be recovered" and damage to the economy. The report suggested that the administrative costs of bankruptcy should be recovered from assets and surplus income, rather than from upfront fees.
Additionally, it recommended that the costs of debt relief orders should be covered by central government funding. According to Citizens Advice, these costs are already "relatively low" at less than £3 million a year currently.
The National Debtline offers free, confidential and independent advice on dealing with debt problems to anyone in the UK. You can call the helpline on 0808 808 4000, or visit the Debtline website for further information and advice.
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