This consultation seeks views on the detail needed to make both the revised administration and new enforcement restriction order schemes work effectively. It enlarges upon provisions made in the Tribunal Courts and Enforcement Act 2007, which introduced better ways of helping people manage their debts. This paper sets out for consultation the areas where secondary legislation will be used to establish the parameters required for the effective operation of both the revised Administration Order (AO) scheme and the Enforcement Restriction Order (ERO) scheme.
Summary of content relating to local taxation
Administration Orders - Current Position
AOs are a court administered debt management scheme for those who are unable to pay their debts and is governed by Section 6 of the County Court Act (CCA) 1984.
Currently the scheme is restricted to those with at least one judgment debt and whose debts total no more than £5,000. Following an order being made interest can no longer be charged, the court manages the debts and creditors named in the order cannot enforce their debts without leave of the court.
There is currently no definition of debts that either can or cannot be included in the scheme. Nor is there any requirement for debtors to update details of their financial circumstances during the term of the order. In many cases orders are made with very low monthly instalments and are allowed to continue for as long as there is compliance or until the order is fully paid. Due to this, some orders take many years to reach completion (i.e. full repayment or revocation).
Enforcement Restriction Orders – Current Position
Section 13 of the CLSA 1990 introduced the concept of the court having the power to order an ERO rather than an AO if it was more appropriate. The particular intention was to allow debtors time free from the threat of enforcement to try to resolve their problems and to ultimately meet all of their commitments.
However, the ERO has never come into operation because Section 13 has never been introduced because there is currently no definition of debts that either can or cannot be included in the scheme.
Proposed debts to be excluded from an AO or ERO
The current AO scheme does not specify the types of debt that can or cannot be included in an order. It has therefore been a matter for each court to decide which debts it would allow to be included in individual cases. This has been a cause of confusion and there is therefore a clear need to define debts that can and cannot be included in both an AO and an ERO.
The paper identifies 3 types of debt that should be excluded (over and above mortgage debt and business debt and those that are non-provable in bankruptcy):
§ rent arrears where the debtor is still in possession of the property – there is no intention or power to interfere
IRRV Response: Please click here to view the IRRV response in pdf format
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