The monthly round-up of news, guidance, legislation, and case law from Shelter's Specialist Debt Advice Service.
News and legal updates
This month's legal round-up includes a reminder of upcoming changes to DRO qualifying criteria, information on mediation for small claims, and the FCA's ongoing work on domestic financial abuse.
Changes to Debt Relief Order (DRO) qualifying criteria
As reported in the March ebulletin, there are two changes to DRO qualifying criteria, effective from 28 June 2024:
the DRO debt limit will increase from £30,000 to £50,000
the value of an exempt motor vehicle will increase from £2,000 to £4,000
The Statutory Instruments for these changes have now been released. The Insolvency (England and Wales) (Amendment) Rules 2024 SI 2024/622 amend Rule 9.9(2)(ii) IR 2016 SI 2016/1024 in respect of the exempt value of a motor vehicle.
The Insolvency Proceedings (Monetary Limits) (Amendment) Order 2024 SI 2024/626 amend the Insolvency Proceedings (Monetary Limits) Order 1986, SI 1986/1996 in respect of the DRO debt limit.
A reminder that applications submitted before 28 June 2024 are subject to the current DRO eligibility limits.
Any application submitted on or after 28 June 2024 is subject to the new DRO eligibility limits.
Clients who have already paid the DRO fee but waited until after 6 April 2024 to submit their application can request a refund. Refunds will not be made automatically.
Our team received additional guidance from the Insolvency Service’s DRO Team:
The hire purchase guidance will be updated in line with the new vehicle disregard limit of £4,000. Approved intermediaries to be notified closer to 28 June.
Where a DRO is made before 28 June 2024, and the client acquires a car with a value of £2,000 (£4,000 on or after 28 June) the DRO won’t be revoked, as it is all based on the £4,000 value. This applies to DROs approved prior to this date.
Any change in circumstances during the DRO moratorium must still be reported to the DRO Team. Approved intermediaries should understand how the client has managed to acquire a new vehicle (of greater value than previous vehicle/new vehicle - given the DRO asset, disposable income, and credit limits) and this must be made clear to clients.
Mediation for Small Claims
As reported in the April ebulletin, mediation is now an integral part of the small claims process. In a press release, the Ministry of Justice and HM Courts and Tribunals Service said that mediation sessions are generally organised within 28 days, which is often much quicker than the wait for a court date.
Ministry of Justice press release
Resolve your claim through mediation
FCA blog post - The hidden cost of domestic financial abuse: working together to improve outcomes
The FCA have published a blog post which discusses their work with the Financial Ombudsman Service, government, domestic abuse charities and trade associations to understand how firms are identifying and managing harm for victim survivors of domestic financial abuse.
Case law
Find debt case law summaries by topic on Shelter Legal.
Mortgage capital not a qualifying debt in breathing space
The County Court held that mortgage capital that had become due because of mortgage arrears was not a qualifying debt for the purposes of a mental health crisis moratorium (MHCM).
Bluestone Mortgages Ltd v Stoute and another, County Court at Canterbury, Claim No. FOOME086
An order for sale in bankruptcy can be delayed in exceptional circumstances
The High Court found there were ‘exceptional circumstances’ when considering whether the bankrupt's family home should be sold. The interests of creditors did not outweigh ‘all other factors’. The sale was delayed by over eight years.
Local authority maladministration
The Local Government and Social Care Ombudsman (LGSCO) decided that Havant Borough Council was at fault because it delayed in dealing with the claimant's review request against large overpayments of housing benefit and council tax support, and continued to try to recover the debt during the period of delay.
Havant Borough Council (23 013 040) (4 April 2024)
Consultancy case study
Specialist Debt Advice answers a query from an adviser whose client had a charging order made against their property for council tax arrears, explaining how they could prevent the local authority from forcing them to sell their home.
Charging order for council tax debt
Freeman on the land
Alexa Walker, senior legal editor at Shelter, reports on some recent cases where litigants have used 'freeman on the land' arguments, stating they cannot be held liable for debts for various reasons, usually related to Magna Carta or another ancient law.