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Ministry of Justice
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New ways to help manage people's debt
People faced with multiple low value debts could benefit from new court measures set out in a consultation paper published by the Ministry of Justice today.
Under the proposals people who need extra time to pay off their debts could go to court for a new Enforcement Restriction Order. If granted this would provide temporary relief from the debt being enforced and collected for a set period of time.
This will provide those with specified debts with some extra time and provide a wider range of payment options. It will be particularly aimed at people with several different low value debts, and who have had a sudden change in their financial circumstances.
Civil Justice minister Bridget Prentice said:
"Debt's a problem that can affect anyone at any time - unexpected costs can hit even the most diligent and careful person. We want to ensure that people who run up debts are given every possible opportunity to pay them off.
"The new Enforcement Restriction Order will give short-term help to people who meet a sudden and unforeseen change to their financial circumstances, from which they are soon likely to recover.
"This consultation also aims to clarify which debts should be included in the longer-term payment scheme currently managed by the county courts. Some debts, like those resulting from family courts, must be paid on time to avoid creating misery for families and children.
"The new measures will help people avoid getting deeper and deeper into debt by providing a balanced approach to the problem. It will help those who genuinely can't pay and are looking for way to manage their debts effectively."
The consultation paper consults on the detail needed to make both the revised Administration and new Enforcement Restriction Order Schemes work effectively. This enlarges upon provisions made in the Tribunal Courts and Enforcement Act 2007, which introduced better ways of helping people manage their debts.
The paper also includes consultation on the debts that should be included in Schemes and those that should be left out. Those to be excluded include those non-provable in bankruptcy including fines, sums due under orders made in family courts and Government student loans.
The revised Administrative Order is a long-term debt management scheme administered by the court, restricted to those with maximum debts of £15,000. The current Administration Order Scheme has been unchanged since 1984 and while an order stipulates that creditors named in the order cannot enforce their debts without leave of the court, there has been a lack of consistency in the approaches taken by different courts.
Other measures included in the consultation are:
* The amount
of surplus income needed before an Administration Order can be
made;
* The provision of information about a debtor's
financial circumstances;
* Providing notice of the intention
to dispose of assets;
* The introduction of a standard method
for calculating debts.
Notes to Editors
* The consultation Administration and Enforcement Restriction Orders: Setting the Parameters which ends on 16 April 2008 is available at http://www.justice.gov.uk/publications/cp0108.htm.
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