# Summary of LRC's (Law Reform Commission) recommendations on Debt Mgt & Enforcement



## Brendan Burgess (17 Apr 2011)

*The main recommendations in the Report are:*These are the key points, as I see them, extracted from their longer press release
*
New process:  Debt Settlement Arrangement 


* A Personal Insolvency Trustee would  manage a _Debt Settlement Arrangement_, which would be for debtors  who “can pay” at least some of their debt. In a Debt Settlement  Arrangement, creditors and a debtor would make a legally binding  commitment in which *the debtor would repay an agreed amount of personal  debt to creditors over a period of up to 5 years. At the end of this,  the debt would be deemed to be repaid in full. *The Debt Settlement  Arrangement process would only be available to a person who acts in good  faith and makes full disclosure of all their assets; if they do not,  the process will automatically end and the debtor could be prosecuted.  If the debtor complies with the Debt Settlement Agreement, at the end of  it he or she would be able to make a “fresh start” without having any  damage to their personal credit rating.




*New process:* *Debt Relief Order*
For debtors whose  circumstances are so bad that they have virtually no prospect of paying  back any debt (the “can’t pay” debtor or “no assets, no income”  situation), the Debt Enforcement Office, with the assistance of the  Money Advice and Budgeting Service (MABS), could make a _Debt Relief Order_.  This would be a once-off Order, and would simply recognise the reality  of an indebtedness that cannot be repaid within a foreseeable time  period. Unless circumstances changed dramatically for the debtor, the  effect of this Order is also that the debt is deemed to be discharged.

*A Debt Enforcement Office to replace the court system and new debt enforcement mechanisms *
The  Debt Enforcement Office would have to ensure that any debt enforcement  mechanism is proportionate .

The Debt  Enforcement Office would be able to use a wide variety of enforcement  mechanisms. These include: instalment orders, attachment of debts  orders; attachment of earnings orders; and goods seizure orders. These  can also be used in combination with each other, where appropriate.

*
A**utomatic discharge from bankruptcy after 3 years,* subject to (a)  leaving the bankrupt’s full estate (including any house) in the  bankruptcy; and (b) allowing the High Court’s Official Assignee in  Bankruptcy to order the bankrupt make repayments for up to 5 years;


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