Pensions Are An Issue For Debt Relief Orders
Jul 9, 2009 Bankruptcy
Uptake on the UK governments new Debt Release Orders has been much lower than was expected by the major debt management providers. A number of reasons have been suggested for this, and one of the most popular amongst industry insiders has been pensions.
Debt Release Order are debt management solutions which became available this April, created for people with lower levels of debt and assets than those who are eligible for IVA’s . To qualify for a DRO a person needs have debt of less than 15,000, be unable to meet their debt commitment and own assets of value of no more than 300.
The issue with pensions has happened because with DRO’s as unlike traditional forms of debt relief; a pension is seen as an asset. Over 99% of pensions have a value much greater than 300, almost any kind of viable pension will disqualify a person from applying for a Debt relief Order.
Many in debt industry see this oversight on behalf of the government, as both IVA’s and bankruptcy do not usually involve pensions in any way shape or form. Many industry professionals are blaming the inclusion of pensions as a major reason why DROs have been so unpopular.
Alternative Reasons suggested for the under performance of debt relief orders have been the low charges which insolvency practitioners are allowed to charge for DRO’s, and the limited numbers of organisations who have be accredited to perform DRO’s. And perhaps in the current economic climate, creditors are more likely to agree an informal arrangement such as Debt Management Plans.
Whatever the reasons or group or reasons really is, the under performance on debt relief orders against predictions has been substantial. Mark Sands from KPMG has said that they expect the uptake of Debt Relief Orders to come nowhere near their initial estimate of 150,000 before the end of the year.
About the Author:
To get advice about Debt Relief Orders it is best to contact a about debt management company in the first instance.
Tags: Bankruptcy, business, Debt, Dro, Finance, Insolvency, iva, money, Pensions, politics