Parliament's new proposal for dealing with the countries debt issues looks to be nothing but window dressing. I am informed that it is a bad idea, badly done, that will bring very little benefit to anybody.
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 main issue is that the profile of a person who qualifies for debt relief order is so narrow that very few people would qualify for it. One friend within the industry stated that 'Only a tramp would qualify for a Debt Relief Order' and also that 'The range of organisations which can offer a Debt Relief Order is so limited 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.
Owning assets of less than 300 (which is only the back catalogue of Iron Maiden on CD), would eliminate over 95% of the UK population. The combination of the other criteria would put that figure over 99.95%. So the government has created a debt solution which nobody qualifies for, which will bring limited benefit, and no real results.
Parliament in its wisdom has appointed just six organisations to be able to supply DROs, five of which are charitable, and one which is a commercial debt management company. How do they justify this? Is not parliament creating a monopoly due to public regulation? Is this really in the interest of fair and open debt management market?
Any private company who is appointed to offer Debt Relief Orders , will never make significant profit from completing a DRO as the fees are slow, it is certain most clients applying for a DRO will not qualify and they will be sold IVA's, 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.
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