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 new DRO guidance, increase in official receiver’s fees in bankruptcy, and an article on council tax debt collection.
DRO Newsletter November 2024 published
The Insolvency Service DRO team has published its November 2024 DRO Newsletter, which should have been sent to all Competent Authorities.
Amongst other updates, the DRO team has produced new guidance on tobacco and alcohol:
Guidance on tobacco and alcohol
Tobacco and Alcohol spending should be funded from disposable income as they are not an eligible expense for a DRO application.
However, we are aware that some clients will be dependent on tobacco and alcohol and may use these as self-medication, especially when trying to reduce dependency on other more harmful substances.
When other expenditure is below the allowable parameters we may consider that they are reducing expenditure elsewhere to compensate for the higher tobacco and alcohol spending.
If this is the case and the expenditure is still within what would normally be expected for food and housekeeping, then this would not prevent them from applying for a DRO.
These exceptions will be treated on a case-by-case basis and full information should be provided on submission.
The SDAS team is considering this guidance. In the meantime, approved intermediaries will need to contact their DRO Competent Authority for guidance on how to record tobacco and alcohol accordingly.
Increase in official receiver’s fees in bankruptcy
The official receiver’s fees to administer bankruptcy and compulsory liquidation proceedings will increase from 9 January 2025 “to mitigate inflationary increases in operating costs”.
The official receiver’s administration fee following a bankruptcy order made on a debtor’s application will increase from £1,990 to £2,390. On a creditor's petition, the fee will increase from £2,775 to £3,300.
The official receiver’s general fee will also increase from £6,000 to £7,200. This fee is for certain costs not recovered out of the official receiver’s administration fee.
There will be no change to the £680 upfront cost to the public of seeking a bankruptcy or winding up order.
The Insolvency Proceedings (Fees) (Amendment) Order 2024 SI 2024/963 will amend the Insolvency Proceedings (Fees) Order 2016 SI 2016/692.
Case law
Find debt case law summaries by topic on Shelter Legal.
Pension funds to pay bankruptcy debts
A trustee in bankruptcy has no right to compel a bankrupt to draw funds from their pension to pay bankruptcy debts or fees.
Horton v Henry [2016] EWCA Civ 989
Council tax debt collection
As council tax debt hits record figures, new reports highlight how aggressive council debt recovery tactics cause distress for vulnerable people. Alexa Jensen and Charlie Howard discuss some of the findings made by these new reports including some of the recommendations for changes to council tax collection.