National charity Citizens Advice today warmly welcomed the promise in the Queen’s Speech to introduce a new low cost, out of court insolvency remedy to help people in debt who are too poor to go bankrupt.

But the charity added that it was deeply disappointed that proposals to regulate bailiffs had been ditched.

Debt Relief Orders

The new Courts and Tribunals Bill will introduce Debt Relief Orders, an alternative to personal bankruptcy targeted at debtors with low incomes and assets – something that Citizens Advice has urged the government to press ahead with for some time. It says this offers hope to those too poor to take advantage of other debt remedies such as county court administration orders, bankruptcy and Individual Voluntary Arrangements (IVAs).

The charity says getting the new remedy onto the statute books quickly is especially important if free and independent debt advice funded by Government for those on the lowest incomes is to be effective. Citizens Advice has been awarded £33 million of this money to provide more face-to-face debt advice in some of the most deprived communities in England and Wales.

Citizens Advice Chief Executive David Harker said: “Low income, combined with poor financial awareness are at the root of many of our clients’ debt problems. For many there is little prospect of their income increasing or their circumstances changing. They need to be given some hope that they can turn things around, with a solution that offers them a fresh start, and the new debt relief order offers hope. The alternative is that they are condemned to a lifetime of poverty overshadowed by an inescapable burden of unmanageable debt.”

New figures published this month reveal that Citizens Advice Bureaux dealt with 1.4 million new debt problems in 2005/06, an increase of 11% on the previous year. Research published in May found that CAB debt clients owe an average of £13,153 – almost a third more than they did three years ago, and the equivalent of 17.5 times their total monthly household income. It will take them an average of 77 years to pay off the money they owe at a rate they can afford.

Citizens Advice is also pleased that other debt relief measures are being updated, such as the administration order, and that the enforcement restriction order will protect people who are in temporary financial difficulties against action by creditors, giving them breathing space to resolve their money issues.

Bailiffs

For many years, Citizens Advice has argued that the use of bailiffs to collect debts by seizing goods is wide open to abuse and should be regulated. There are few controls over what bailiffs do and how much they charge, with bailiff powers set out in a complex series of archaic laws – some dating back to 1267. What the Bill is proposing will not adequately tackle bad practice across the board, which can only be addressed properly through independent regulation.

CAB evidence shows that private bailiffs used by local councils to collect unpaid council tax are acting almost as a law unto themselves, with devastating effects on people’s lives. Intimidation, harassment and excessive fee charging by bailiffs are driving already vulnerable people deeper into poverty and debt.

David Harker, Chief Executive of Citizens Advice said: “We are deeply disappointed that the new Tribunals, Courts and Enforcement Bill, which aims to introduce a single procedure for taking control of goods, has dropped any plans to regulate the activities of bailiffs, even though the bill will give them added powers to use reasonable force to enter premises. We are very concerned that these powers will be open to abuse.”

‘Reports from clients of intimidation, unreasonable demands and excessive charges by bailiffs are commonplace, but the system for people to complain to the county court is not working. This sort of bailiff behaviour is driving already vulnerable people deeper into poverty and debt. The new bill must be amended to include regulation to end these unacceptable bailiff practices.“