The monthly round-up of news, guidance, legislation, and case law from Shelter's Specialist Debt Advice Service.
DROs and pension assessments
The current DRO Guidance on pensions suggests that advisers can come to the Specialist Debt Advice Service for help valuing pensions.
Unfortunately, SDAS cannot give pensions advice - which includes interpreting pension paperwork or carrying out pension valuations and assessments. Your client’s pension provider or a pension specialist should be able to provide this figure.
Pension calculations are complex and well beyond the scope of debt advice in general.
Recent cost of living payment increases
The Autumn Statement 2022 under ‘Welfare, work and pensions’ contains information on further help with the cost of living and pension and benefits uplift including:
households on means-tested benefits to receive an additional £900 Cost of Living payment in 2023-24
pensioner households to receive an additional £300 Cost of Living payment
individuals on disability benefits will receive an additional £150 Disability Cost of Living payment in 2023-24.
increasing benefits in line with inflation of 10.1%
the standard minimum income guarantee in Pension Credit to also increase in line with inflation from April 2023
DRO team update on cost of living payments
The DRO Team has confirmed that this recent announcement regarding cost of living payments should be treated in the same way as the previous announcement covered in the DRO News June 2022 newsletter:
"Intermediaries are advised that the DRO Team will not consider the recently announced payments that families receive from the Government to assist with the current cost of living crisis as windfall payments or an increase in income requiring a re-assessment of surplus income for anyone who is subject to a DRO moratorium at the time the payments are made.
For anyone considering a DRO the cash payments should be treated as income. The funds are provided to assist with rising costs which will be reflected in an applicant’s outgoings. Therefore in making the surplus income calculation the payments should be reasonably apportioned, over a maximum of 12 months, to offset against increase outgoings when determining that the applicant meets the eligibility criteria for surplus income."
Autumn Statement 2022 under Welfare, work and pensions
Form of authority for DRO intermediaries advising prisoners
The current DRO Guidance on prisoners states that the Approved Intermediary must obtain written authorisation from the incarcerated individual and send this to the DRO team.
The DRO Team has now confirmed that it will update the guidance to reflect that they no longer need any additional written authority from prisoners.
DROs and compensation for wrongful arrest
The current version of the Debt Relief Orders: Guidance for debt advisers states:
"Compensation for wrongful arrest
A compensation payment received for wrongful arrest is treated an asset.
Compensation for wrongful arrest received during the DRO period must be reported and the lump sum protocol will be applied."
The DRO Team has amended this guidance, stating that claims for compensation for wrongful arrest and unlawful detention might consist of special damages, general damages, or both.
Special damages are paid for financial loss, for example a door being broken in making an arrest or loss of earnings. Special damages are an asset in a DRO.
General damages are paid for pain and suffering, for example personal distress or injury. General damages are not an asset in a DRO.
The Approved Intermediary should check the breakdown of the claim.
See the Debt Relief Orders: Guidance for debt advisers under ‘Personal injury compensation’ for guidance on how damages for wrongful arrest and unlawful detention would be viewed.
DRO Newsletter October 2022
The Insolvency Service has published DRO News October 2022, which should have been circulated to all DRO Competent Authorities. The newsletter includes:
Guidance on applying for a ‘persons at risk of violence’ order
HMRC Tax Credits
Creditor updates
Breathing Space guidance on qualifying debts
Paragraph 2.6 of the Breathing Space guidance for creditors currently states:
"New debts incurred during a breathing space are not generally qualifying debts. Neither are new arrears on a secured debt that arises during a breathing space. However, if a new debt is incurred in the period after the breathing space starts but before you make your search for additional debts, they may be able to be included in the breathing space."
This appears to contradict the legal definitions of a ‘qualifying debt’ and ‘additional debt’, and suggests that in some limited circumstances a new debt can be included in a breathing space.
The Insolvency Service has now confirmed that:
new debts incurred during a breathing space are not qualifying debts
new arrears on a secured debt that arises during a breathing space are not qualifying debts
a qualifying debt discovered after the breathing space starts can be included in the breathing space
Statutory Debt Repayment Plan put on hold
HM Treasury has now published its response to the Statutory Debt Repayment Plan (SDRP) consultation. It has confirmed that the launch of the SDRP will be delayed until after the Insolvency Service has completed its insolvency framework review.
Statutory Debt Repayment Plan: Consultation
Call for evidence: Review of the personal insolvency framework
Ombudsman News
Ombudsman News Issue 175 has been published. In this edition, the Financial Ombudsman Service (FOS) discusses its refreshed guidance for consumers on fraud and scams and its latest complaints data. Issue 175 also discusses its latest complaints data.
CPAG Handbooks
CPAG has announced that they are continuing to work with the Money and Pensions Service to keep the Debt Advice Handbook online. The 14th edition is hosted on AskCPAG with open access - meaning it will be accessible to all, for free, from any computer or mobile device.
CPAG’s Fuel Rights Handbook is now free to access online thanks to a partnership with The Indigo Trustand The Clothworkers Foundation, the handbook is regularly updated to ensure you have access to the latest advice rights and advice.
Case law
Find debt case law summaries by topic on Shelter Legal.
A third-party debt order can be enforced against a debtor's personal pension entitlement
The judgment creditor (Guy parties) was granted an injunction ordering the debtor (Brake parties) to exercise their right to draw down their pension entitlement under a third-party debt order (TPDO).
Brake v Guy and others [2022] EWHC 1746 (Ch)
Bankruptcy annulment application dismissed despite creditor’s petition based on an unliquidated debt
The court considered several arguments from Dusoruth to annul a bankruptcy order, including one that the petition was based on an unliquidated sum as it comprised a claim for unjust enrichment.
The court exercised its discretion to refuse to annul the bankruptcy order due to delays and obfuscation from Dusoruth.
Dusoruth v Orca Finance UK Ltd [2022] EWHC 2346 (Ch)
A judgment following a Tomlin Order is a contingent debt included in bankruptcy
In April 2016 Oliver was ordered to pay damages and costs following a breached Tomlin order. The High Court refused to grant a final charging order against Oliver’s interest on the basis that both the damages and costs were extinguished in Oliver’s bankruptcy.
Oliver was made bankrupt in October 2014 and was discharged 12 months later.
Little Miracles v Oliver [2022] EWHC 2553 (Ch)
Effect of a charging order on homeowners
A charging order can be secured against a homeowner's legal interest in a property if they are a sole owner, or against their equitable interest if they are a joint owner.
Our new content explains how a charging order is secured and its effect on jointly owned property, how to find information about a charging order, and how a charging order is repaid.
Read Effect of a charging order on homeowners on Shelter Legal.