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Certain approved agencies will be able to force creditors to write off substantial debts incurred by consumers
Here is the gist of the 4th May 2008 Mail on Sunday article
Government approved agencies will be able to force creditors to accept a schedule of repayments for the remainder of the money owed, regardless of the lender's wishes.
Creditors will not be able to petition for bankruptcy, nor will utilities be allowed to cut off gas or electricity supplies to clients of such companies.
All this is in the Tribunals, Courts and Enforcement Act passed last year, but the Ministry of Justice is consulting before activating the relevant clauses.
One concern is that unscrupulous debt advisers could improperly arrange debt write-offs in return for a cut of the proceeds.
At present, about 70,000 people with heavy borrowings are in 'debt-management plans'. These are arranged by private debt advice firms and charities, which negotiate with lenders to provide a timetable for repayment.
'Such schemes depend on the voluntary participation of the debtor and creditors and operate without any form of regulation,' said the Justice Ministry.
'There is currently no power to compel creditors to adhere to the terms of a debt repayment plan.'
Under the new law, Justice Secretary Jack Straw will license approved operators of debt management plans, which will then have the power to force creditors to accept the plans that they draw up.
The Justice Ministry added that operators would also be able to compel creditors 'to write off a proportion of the debts where a debtor complies with a plan, but cannot repay the full amount in reasonable time.' These new compulsory debt management plans come alongside other types of 'quickie' insolvency for people who have borrowed too much.
Debt-relief orders (DROs), which can wipe out debts of less than £15,000 without the need to go to court, are due to come into force next April.
A simplified version of Individual Voluntary Arrangements (IVAs), an alternative to bankruptcy, will become available from October, reducing creditors' powers to block an arrangement.
Here is the gist of the 4th May 2008 Mail on Sunday article
Government approved agencies will be able to force creditors to accept a schedule of repayments for the remainder of the money owed, regardless of the lender's wishes.
Creditors will not be able to petition for bankruptcy, nor will utilities be allowed to cut off gas or electricity supplies to clients of such companies.
All this is in the Tribunals, Courts and Enforcement Act passed last year, but the Ministry of Justice is consulting before activating the relevant clauses.
One concern is that unscrupulous debt advisers could improperly arrange debt write-offs in return for a cut of the proceeds.
At present, about 70,000 people with heavy borrowings are in 'debt-management plans'. These are arranged by private debt advice firms and charities, which negotiate with lenders to provide a timetable for repayment.
'Such schemes depend on the voluntary participation of the debtor and creditors and operate without any form of regulation,' said the Justice Ministry.
'There is currently no power to compel creditors to adhere to the terms of a debt repayment plan.'
Under the new law, Justice Secretary Jack Straw will license approved operators of debt management plans, which will then have the power to force creditors to accept the plans that they draw up.
The Justice Ministry added that operators would also be able to compel creditors 'to write off a proportion of the debts where a debtor complies with a plan, but cannot repay the full amount in reasonable time.' These new compulsory debt management plans come alongside other types of 'quickie' insolvency for people who have borrowed too much.
Debt-relief orders (DROs), which can wipe out debts of less than £15,000 without the need to go to court, are due to come into force next April.
A simplified version of Individual Voluntary Arrangements (IVAs), an alternative to bankruptcy, will become available from October, reducing creditors' powers to block an arrangement.
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