Debt Relief Orders UK Parliament gets it wrong
Parliament’s new proposal for dealing with the countries debt issues looks to be nothing but window dressing. I am informed that it is a bad idea, badly done, that will bring very little benefit to anybody.
The concept for debt relief orders is really a lighter version of the more formal versions of debt management (IVA’s and bankruptcy). This is not enacted by the courts but by the insolvency service.
The issue is that the debt profile of someone who qualifies for a debt relief order is so narrow that a limited range of people would qualify for it. A source within the industry said that ‘only a tramp would qualify for a Debt relief order’, and also that ‘the organisations which can offer a debt relief order is so limited that obtaining one may be very difficult’.
To qualify for a Debt Relief Order you need to fulfil a number of criteria, which include having assets less than 300, 15,000 pounds of debt, and less than 50 per month of disposable income.
Needing to have assets of less than 300, (which is about the equivalent of a good CD collection), would eliminate over 95% of the UK population. The combination of the other criteria would put that figure over 99.95%. So the UK government has created a scheme which nobody qualifies for, which will benefit no one, and bring no tangible result.
Westminster in its wisdom has only empowered six organisations to be able to complete Debt Relief Orders, five of which are not for profit organisations. However, one is a commercial debt management company. How is this justified? Is this not a case of public regulation creating a monopoly?
Any private company who is appointed to offer Debt Relief Orders , will never make significant profit from completing a DRO as the fees are slow, it is certain most clients applying for a DRO will not qualify and they will be sold IVA’s, Debt Management Plans or Bankruptcy services.
The Westminster government are not only acting in inefficient and wasteful manner, but in a way that seems commercially one sided, corrupt, and looking after the interests of only one company within the marketplace.
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