Wednesday, 7 October 2009

Government consults on Debt Management Plans but County Court IT systems hold up delivery of real assistance for debtors

The Ministry of Justice, Department for Business, Innovation and Skills, and the Insolvency Service have launched a joint consultation over the potential need to place debt management plans on a statutory footing in order to improve the assistance to indebted households. At the present time many people in debt enter into voluntary debt management plans but are unable to get a proportion of their debts written off as they may be able to through a statutory scheme. As a result many of the Debt Management Schemes that are entered into are not sustained.

In the consultation paper, Government also indicate that other possible sources of assistance - which formed part of the Tribunals, Courts and Enforcement Act 2007, such as Enforcement Restriction Orders which would have provided people with the opportunity of obtain a moratorium on debt recovery for up to a year - will not now be implemented until 2011 at the earliest due to the need to replace County Court IT systems.

Dood will be making a full response in due course, but the delay over the introduction of Enforcement Restriction Orders is clearly disappointing and fails to fit with Government's commitment to provide 'real help now'. Alternative approaches may therefore need to be found - for example by the Treasury insisting that lenders who have received tax payer bail outs now offer moratoriums on debt collection for up to 12 months where someone has recently been made unemployed.

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