I racked up £12k of credit card & pay-day loan debt – axing ‘unfair’ fee will help others like me get back on track

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BORROWERS who are struggling to repay bills can wipe all of their debt using a little-known method – and now it comes without a fee.

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

Josh Munns had built up £12,000 worth of debt and couldn’t pay it off

But with the help of Money Wellness – an organisation backed by the government’s Money and Pensions Service (MaPS) – the 30-year-old realised he could qualify for a debt relief order (DRO).

Under these arrangements, debts are frozen for 12 months and during this time creditors are not allowed to contact you or ask for payments.

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

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

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

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

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

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

He has now praised the decision to ditch the £90 charge, telling The Sun: “I was trying to save up 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 there is a chance for them to get things sorted.

“It was another unfair hurdle to getting debt free – and it’s finally gone.”

“I felt like I was in a deep pit”

Josh couldn’t afford to pay back the £12,000 he owed or stay on top of his repayments to his creditors.

At the same time, multiple firms were contacting him about his outstanding debt with them including credit card companies, mobile phone providers and pay-day lenders.

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

But in June 2023, he was offered a place in supported accommodation and got clean of drugs and alcohol.

However, despite moving on and getting himself together, his debts caught up with him and he began being bombarded by creditors so often that he “couldn’t see a way out”.

He said: “It all just got on top of me – I was so badly in debt and deep in my addiction and eventually I ended up homeless.

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

“But then I started getting letters from creditors and debt companies asking for their money back, and that’s when I knew I needed to do something about it as soon as possible.

“That’s when I made the decision to ask for help and I found Money Wellness.”

Money Wellness offers free debt advice. An adviser went through Josh’s debts as well as his income and expenditure and worked out that he could benefit from a DRO.

In the end, his fee was covered by the MaPS as it agreed to cover fees for those struggling between the Spring Budget announcement on March 6 and the change actually coming into effect today.

Josh’s DRO was finally approved on March 22.

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

“I can now think abut my future and moving out of supported accommodation.

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

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

Money Wellness said the removal of the DRO fee will help 40,000 of the most financially vulnerable households in the country.

It also found that that around 44% of those suitable for a DRO in the past year couldn’t afford to pay the £90 fee within the required 28 day period.

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

“Removing the fee, alongside the other changes to assets, will be significant and will mean more people with be able to access the solution sooner.

“Before the changes, we were regularly seeing people – who were often distressed – having to save for two months or more, or make applications for grants, to be able to afford the fee.

“They will now be able to get help immediately.”

What is a debt relief order?

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

If there is no uplift in your financial situation after the year, the debt is wiped completely.

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

And you won’t qualify if own your home or another property.

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

And you must not have have savings or a single possession worth more than £2,000.

You can’t take out a DRO if you have an IVA in place or if you’re going through bankruptcy.

An IVA is a separate type of debt relief arrangement where you pay back debts over time.

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

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

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

Free debt charities can signpost you to a specialist adviser.

Meanwhile, one woman told us how she fell into £30k 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 debt help for free.

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

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

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