Insolvency

Business, Innovation and Skills written question – answered on 2nd September 2013.

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Photo of Graham Brady Graham Brady Chair, Conservative Party 1922 Committee

To ask the Secretary of State for Business, Innovation and Skills

(1) what assessment he has made of how many informal debt management plans might be replaced by Simple IVAs;

(2) what assessment he has made of the potential effect on returns to creditors across all debt resolution procedures which may occur if the simple IVA were to be introduced;

(3) if he plans to introduce the simple IVA, as originally proposed by the Insolvency Service in November 2008;

(4) whether he plans to introduce further reform of personal insolvency procedures.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

We undertook an in depth review of the personal insolvency regime 2010/11 ("Managing Borrowing and Dealing with Debt"), which asked for views on whether the regime itself was fit for purpose. The conclusion of that review was that the current options available do provide a balance between debt write off and relief and reasonable levels of debt repayment. Therefore in the light of the responses there are no current plans to introduce legislation for simple IVAs.

However, we will be introducing major changes to the debtor petition route into bankruptcy by removing the courts and making the process administrative; we will also be evaluating the debt relief order regime next year.

The key issue for Government is to ensure that consumers in financial difficulty know where to go for free and impartial advice on the various debt remedies available to them, both formal insolvency procedures and informal debt management plans. Some debtors will prefer the formality that an individual voluntary arrangement, for example, will bring; for others, the more informal debt management plan will be the preferred route. In developing the debt management plan protocol with industry we will be collating more data on debt management plans, which will allow us to better assess how well the debt management market is meeting consumer needs.

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