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| Annual Report 2008 Recommendations - Personal Insolvencies The number of personal debtors in difficulties is increasing sharply as the recession deepens. It is crucial that, when they seek help, they are given objective advice on the best way out of their difficulties and that, when statutory debt relief through a bankruptcy or an Individual Voluntary Arrangement (IVA) is justified, there are no obstacles to the most appropriate solutions. We are concerned that some debtors, who have no realistic prospect of repaying their debts within a reasonable period, may be denied the form of debt relief most appropriate for them, either by creditors who reject reasonable proposals for IVAs, or because some debt advisers and IPs prefer to guide the debtor to an IVA or an informal Debt Management Plan (DMP) when bankruptcy may be the better option. To help debt advisers give the right advice and debtors to make well-informed choices, there is also a need for better information and statistics about the different debt solutions, in particular the average duration and success rates of both IVAs and DMPs. The Insolvency Service is already committed to producing better statistics on IVAs, but there is very little information about either the numbers of debtors entering DMPs or how DMPs perform. The introduction by the Government in April of the Debt Relief Order will provide a much needed solution for debtors with low income and assets. But we believe that further coordinated efforts by government departments, the regulators of both IPs and the OFT (which licenses debt advisers) and the cooperation of the major creditors are needed to ensure that the appropriate forms of debt relief are accessible for all debtors, at all income levels and all levels of indebtedness, who are unlikely to be able to repay their debts within a reasonable period. |
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