Key Activities

Debt Relief Orders
In March 2005 the IPC also responded to a consultative document on “Relief for the Indebted – An Alternative to Bankruptcy” issued by the IS, which, in line with earlier proposals from the Department of Constitutional Affairs (DCA) recommended the creation of a non-court administered scheme of Debt Relief Orders (DROs) to deal with personal debtors whose income and assets are so low as to make it unrealistic for them to make any repayment of their debts.

The proposal envisaged that individual debtors’ eligibility for a DRO would be initially assessed by money advice intermediaries, probably working in the voluntary sector, though the final decision would be taken by an Official Receiver. Our response recognised the case for a simplified form of debt relief for debtors with no (or virtually no) free income or assets.

We, however, expressed two reservations about the proposals, both of which were shared by a number of other respondents. We were concerned, first, that the system might be vulnerable to fraud, unless the debtors’ claims to meet the eligibility criteria were properly checked. Second, we questioned whether the voluntary organisations would have adequate financial and other resources to carry out the necessary checking.

The IS has now announced its intention to go ahead with the proposals, which will require new legislation. The IS stated that the legislation will contain appropriate and proportionate remedies to discourage misconduct by debtors.

The IS is now in discussion with the relevant voluntary and other organisations in order to define the role of the intermediaries more precisely and to address the question of adequate funding.

Home I News I Contact IPC I Useful Links I About IPC