13 June 2008
People in debt will now get early advice from creditors, helping them to avoid court, in new proposals announced by Justice Minister Bridget Prentice today.
The proposals, in response to the consultation paper 'the debt claim process', will require all creditors to give people who owe them money information on how to contact them to discuss problems, and details of independent free advice providers in a letter before taking legal action.
Nearly nine out of ten respondents think such early advice would go a long way in helping people find ways to settle their debts.
Justice Minister Bridget Prentice said:
'Getting the right advice at the right time can make the difference between keeping your home or losing it.
'Today's proposals give people a chance to look for ways to tackle their debts, where to go for advice and the different ways repayments can be managed. Enough time should also be set aside for the advice to take effect.
'Being in debt can be frightening for most people and information given at the right time could reduce the number of people who get deeper and deeper into debt.
'Most creditors send letters to those not meeting repayments to encourage either direct contact with them or contact through a debt advice provider, but this new step will make it the norm for everyone.'
In addition, from July posters giving details of free advice providers will be displayed in all county courts to assist those currently having debt problems. A similar list will also appear later in the year on the online claim form 'Possession Claim on Line' used by creditors.
Proposals to change civil procedure rules to include these requirements will be recommended to the Civil Justice Council and the Civil Procedure Rule Committee.
1. Consultation paper: the debt claim process
2. The Office of Fair Trading has introduced an information sheet that provides options for dealing with debt problems and details of advice providers. Under recent changes introduced by the Consumer Credit Act 2006 creditors must provide those in arrears, in certain types of cases, with a copy of this sheet.
3. For further information, please contact Kathryn Montague, at the Ministry of Justice press office, on 020 7210 1397.
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