Business, Enterprise and Regulatory Reform written question – answered on 30th April 2008.

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Photo of David Drew David Drew Labour, Stroud

To ask the Secretary of State for Business, Enterprise and Regulatory Reform what assessment he has made of the practices of credit companies in issuing statutory demands to debtors rather than applying for county court judgements; and what assessment he has made of the effect this practice has on levels of bankruptcies.

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

A creditor can ask the court to make a bankruptcy order in respect of a debtor on the ground of inability to pay their debts which may be demonstrated on the basis of a failure to comply with a statutory demand, or alternatively that a county court judgment has been returned unsatisfied in whole or in part. Both routes are equally acceptable, subject to the proper procedure being followed, and may result in a bankruptcy order being made by the court.

The Insolvency Service does not keep statistics on the number of bankruptcies which arise from either route, either within the credit industry or more widely and the effect of any particular industry practices upon bankruptcy numbers is therefore unknown. However, the number of bankruptcies arising from creditor petitions has remained relatively flat over the past few years.

There are a range of measures in place to reduce the number of individuals who become over-indebted and to support those who have become so. These include the expansion of the National Debtline, which now helps 150,000 clients per year and the face to face debt advice programme.

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