There have been a number of changes proposed to both the insolvency law and the debt enforcement procedures which are currently in the pipe-line. There has however been a considerable amount of government time and energy recently put into the changes to the Insolvency Rules which came out on 6th April 2017 so it is likely that they will remain “on the back-burner” for some time to come.
These are some of the more significant ones:-
County Court Administration Orders (AO)
At the moment these only apply to people with unsecured debts under £5,000, a figure which was fixed in 1986 and is therefore very out of date. You can obtain protection from your creditors by registering yourself at Court and paying a fixed regular amount to the Court towards the debts.
It is proposed that the limit be increased to £15,000 so that debtors with non business liabilities under that amount but who have assets or surplus income over £50 pm, who are not therefore entitled to a DRO, can deal with their debts without having to go bankrupt or enter into an IVA. It will not however be possible to use an Administration Order to get protection from business debts, rent or Council tax or any of those debts which would be excluded from bankruptcy.
You will be required to pay your surplus income into Court for 5 years.
It is expected that the Court’s time freed up because of Debt Relief Orders will allow them to cope with the added number due to the higher registration threshold.
Enforcement Restriction Order (ERO)
It is also being proposed that anyone with non business debts who has difficulty servicing them due to a change in circumstances, provided that they believe that they will improve within 6-12 months will be able to obtain an Enforcement Restriction Order which will prevent any creditor from taking any action to recover their debt for a period of up to 12 months. This is designed to give a breathing space only and does not prevent interest from continuing to run. It will be possible to obtain an ERO even if you are subject to a Debt Management Plan, but not if you are bankrupt or in an IVA.
Debt Management Plan Regulations
After several years of consultation and having drafted the legislation to bring in a new stlye Simple IVA, the Government has now announced that they have scrapped the idea.
Instead they are looking at proposals for the regulation of debt management plans which might allow for creditors to be forced to accept requests for time to pay. In the meantime the OFT has published new guidelines. Although the framework legislation is already in place it seems that the implementation will be a year or two off yet.