Westminsters most recent proposal for dealing with debt looks to be nothing but window dressing. I believe that it is a badly constructed and badly implemented proposal that will bring very little benefit to very few people.
The idea behind debt relief orders is a slimmed version and less formal version of debt management (IVAs and bankruptcy), which is not implemented by the courts but by the insolvency service.
The problem is that the profile for a debt relief order is so narrow that very few people would qualify for one. A contact in the industry states that Only a tramp would qualify for a Debt relief order, and also The range of organisations which can offer debt relief orders is so narrow that obtaining one may be very difficult.
To obtain a Debt Relief Order you need to fulfil the following criteria: have less than 15,000 pounds of debt, have assets of less than 300, have less than 50 per month of disposable income, and the inability to pay your debt.
Having assets of less than 300, (which could be the equivalent of a poor CD collection), would eliminate most of the UK population. The combination of the other three criteria would increase the numbers even higher. So parliament has created a debt scheme which nobody qualifies for, which will benefit no one, and bring no tangible result.
The UK government has only chosen six organisations to be able to provide DROs, five of which are charitable trusts, but one commercial debt management company. How can they justify this? Is it not creating a monopoly due to public regulation? Who in this company knows who within the government?
It was Baines and Ernst who were the private company appointed who can offer Debt Relief Orders, and though the fees are so low that they would never make significant profit from completing a DRO, it is certain most clients applying for a DRO will not qualify and Baines and Ernst will be able to sell them an IVA, Debt Management Plans or Bankruptcy services.
We see not only parliament acting in an inefficient and wasteful manner, but in a way that seems commercially biased , corrupt, and looking after the interests of but one company within the debt management marketplace.
