Under the proposals, debt relief orders will be introduced as part of the court and tribunals bill, aimed at people that debt solutions such as County Court Judgments (CCJs), Individual Voluntary Arrangements (IVAs) or bankruptcy may not be suitable for.
David Harker, chief executive of Citizens Advice, said: “Low incomes, combined with poor financial awareness, are at the root of many of our clients’ debt problems.
“They need to be given some hope that they can turn things around, with a solution that offers them a fresh start, and the new debt relief order offers hope.”
He warned that without reform, people are condemned to a life of poverty with the “inescapable burden of unmanageable debt”.
With Citizens Advice noting an 11 per cent increase in demand for debt help, it said that it welcomed other measures to reform the debt solution system.
However, Mr Harker stated he was concerned that the bill will give bailiffs more powers that could be abused.