IVA Articles
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IVA : What Is A Debt Relief Order?
If you don't qualify for an Individual Voluntary Arrangement (IVA) or a Debt Management Plan it may be that you do qualify for a Debt Relief Order.
The Insolvency Service, the government department charged over-seeing the law and regulations in the insolvency industry, has issued a consultation paper aimed at finding an alternative to bankruptcy for debtors who can't afford an Individual Voluntary Arrangement (IVA) or a Debt Management Plan.
The consultation paper has been circulated throughout the insolvency industry so that any interested parties can pass comment before its proposals are put before Parliament.
The basis of the proposal is to find a binding alternative, recognised in law, for a small but specific group of debtors who can't get debt relief through the channels available now.
It is aimed at debtors who owe up to £15000 of both secured and unsecured debt, who do not own a property and who have a disposable income after all essential costs of £50 or less.
The proposal is aimed helping at the very poorest members of society who are not home owners, who have no realisable assets more than £300, who are typically dependent on state benefits or very low incomes, who are in debt due to a crisis or a life accident, who still wish to pay their debt, but simply cannot.
There will be costs in the new scheme but they will be in the region of £100, much cheaper than the cost of a Bankruptcy. The new proposal takes some of its ideas from the current bankruptcy rules but it has been adapted for simplicity and cost efficiency.
The new proposal relies on the debtor applying for the order with the help of a yet to be decided debt advice intermediary. The debt adviser will prepare and scrutinise each case to ensure that it meets the requirements of the debt relief order and, then submit it to the official receiver. He will then issue the order side stepping the expensive costs of the court and a judge.
The order will be entered on to the Insolvency Register and credit agencies will be able to use the information for their records. The order will last for 12 months and at the end of that time the debt owed will be discharged leaving the debtor debt free.
The creditors will have rights of redress similar to those for Bankruptcy, if it is found that the application was fraudulent or if the debtor receives a windfall payment.
