Debt Management

The UK Government’s most recent proposition for dealing with debt looks to be nothing more than dead duck. I would surmise that this is a badly constructed plan, badly executed, which will bring very little benefit to very few people.

The concept for DROs is really a trimmed down version of the more formal versions of debt management (IVAs and bankruptcy), which is enacted 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 qualify for a Debt Relief Order you need to fulfil a number of criteria, which include having assets less than 300, 15,000 pounds of debt, and less than 50 per month of disposable income.

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.

Westminster in its wisdom has only empowered six organisations to be able to complete Debt Relief Orders, five of which are not for profit organisations. However, one is a commercial debt management company. How is this justified? Is this not a case of public regulation creating a monopoly?

A commercial debt management company will never make a substantial profit from completing a DRO, it is certain most clients applying for a Debt Relief Order will not qualify and Baines and Ernst will be able to sell them an IVA, Debt Management Plans, or Bankruptcy services.

Again we see not only the UK government acting in an inefficient and wasteful manner, but in a way that seems commercially prejudiced, corrupt, and looking after the interests of one company within the debt arena.

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