Debt Relief Orders have arrived
by Gill Montia
Story link: Debt Relief Orders have arrived
Debt Relief Orders come into effect in England and Wales from today, 6th April.
The new legislation allows borrowers who meet certain criteria to have a debt of £15,000 or less written off by the Official Receiver.
Applications should be made to the Insolvency Service via an approved debt adviser.
An order lasts for 12 months, during which period the creditor named in the order can only take action to recover the debt if they obtain authority from a court.
If the debtor’s circumstances remain unchanged, the monies owning are written off after the 12 month period.
An applicant’s assets should not exceed £300 (excluding an additional allowance for a vehicle) and disposable income must be no more than £50 a month after tax, national insurance and reasonable household expenses.
Accountancy and recovery firm, KPMG, is predicting a sharp rise in the number of personal insolvencies in England in Wales during 2009.
In December, the professional services firm estimated that up to 150,000 people will either be declared bankrupt or enter into Individual Voluntary Arrangements or Debt Relief Orders during the course of the year.
According to KPMG, around 105,000 people were the subject of legal arrangements over their debts last year and a surge in people going bust could set a record high for the Insolvency Service’s figures, which were first collected in 1960.
For creditors, it could mean writing off at least £1.1 billion in consumer debt in 2009.
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