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Consultation on new debt relief order

23 January 2013

Islanders are being asked for their views on a proposed new bankruptcy law to help people who find themselves in a never-ending cycle of debt through no fault of their own.
The new procedure would give the Viscount discretionary power, on the recommendation of an authorised intermediary, to freeze a person’s specified debts in a document that is to be called a Viscount’s Remission Order (VRO).
This would allow the economic and social implications of a case to be taken into consideration without the need for lawyers and formal court proceedings, which are required under the Désastre Law. It would also provide prompt assistance for debtors who are the victims of adversity.
Subject to a qualifying period of residence in the Island, individuals will be eligible for a VRO if:
  • their debts do not exceed £25,000
  • they do not own a motor vehicle worth more than £2,000
  • they do not possess other assets exceeding £5,000
  • their disposable income does not exceed £100 a month (after deduction of tax, social security contributions and normal household expenses)
An intermediary, currently the Jersey Citizen’s Advice Bureau, will forward an individual’s application, along with their own initial assessment, to the Viscount who will consider the application.
Once a VRO is registered all debts specified within the order will be frozen and creditors to whom the debts are owed will not be able to call them in. Affected creditors will be issued a copy of the VRO and will be given the opportunity to respond. All objections will be considered and the Viscount may ask for more information. Until a query has been resolved the Viscount may decide to suspend the VRO.  Once a decision has been reached the VRO can be revoked or amended where necessary. After a year the debtor will be discharged of all debts specified in the VRO.
Assistant Chief Minister, Senator Sir Philip Bailhache, said “The main impact of this change is the discretionary nature of the Viscount’s Remission Order and the quick resolution to an individual’s debt problems. It is designed for genuine cases where people have no reasonable prospect of repaying their debts. It does not mean debts are not taken seriously and it will allow creditors to voice any concerns they may have during the VRO process.”
A similar scheme called the Debt Relief Order currently operates in England and Wales.
The deadline for submissions to the consultation is 12 April.
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