Letter: Put consumers in control of their debts

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Sir: Even with the combined force of European governments bearing down on it, the Bundesbank is still reluctant to put the interest of Europe before that of Germany. Now the Government must act to allow the British consumer to lift our economy out of the fiscal gutter. But what can they do?

One simple step would be to implement Section 13 of the Courts and Legal Services Act 1990. This would radically alter the nature of County Court Administration Orders to place the consumer in full control of his debts. Confidence would return as the consumer could again base spending on his current earning ability and expenditure pattern, and the twin fears that many consumers undoubtedly have - soaring interest rates and the unexpected loss of their job - would be greatly reduced.

Currently, a County Court Administration Order consolidates all the debts of an individual and fixes an amount to be paid regularly towards clearing the debts. Section 13 makes four important amendments: 1) it allows the debtor (or a creditor) to apply for an Administration Order without first waiting for a judgment against him; 2) it removes the current pounds 5,000 limit; 3) it allows the debt to be treated as fully paid once the debtor has complied with the Order; 4) it prevents any creditor (with the apparent exception of the gas, electricity and water suppliers) from issuing a bankruptcy petition while the Order is in force. In effect, it allows the individual to retain control of his affairs even if his financial situation has become untenable - without the stigma of bankruptcy.

Implementation of Section 13 would, therefore, protect the consumer from the worst excesses of corporate legal departments. It would promote confidence to spend, which in turn would support the economy and reduce the numbers falling into the mire of unserviceable debt.

Creditors would also benefit. The risk of the client falling victim to a bankruptcy petition from another direction will diminish. Lenders will realise that, in the worst case, they will receive as much as the debtor can afford to repay (which is the most they can ever recover]) and, as an average, more debts will be recovered than under the present system.

How can the Government resist the simple and timely implementation of Section 13?

Yours sincerely,




15 September