Enforcement Restriction Order (EROs) are not expected to be introduced until April 2011. They are being designed to help debtors that have experienced an unforeseen change in their circumstances. We will update all members when they become law. You will need to sign up to receive the member's email.

The article is in two sections, one the current position that is available to debtors and two, the key points of the proposed ERO.

Part one - The current situation available to a debtor

Admin Orders

Debtors can propose an Admin Order (AO) for debts below £5,000 provided there is one judgement in place, CCJ. This has not been updated for 21 years and is no real good to today's overstretched debtor. Once the order is made then no interest can be applied nor can any creditor enforce their debt without the leave of the court.

It is proposed to raise this to be in line with a Debt Relief Order (DRO), due soon, to £15,000 and define what debts cannot be included. And with a max 5 year time limit.

Debtors will require to take a statement of truth declaring their full level of debts to prevent abuse of the system.

For example if there were 60 payments at £250 per month this would equate to £15,000. Creditors will get paid in full minus any court costs, good return for creditors, but cannot add interest, incentive for debtor, this would remove the necessity for low level Individual Voluntary Arrangements, IVA's. The £15,000 limit will be kept under review.

Will only apply in England and Wales.

Part two - Enforcement Restriction Order (ERO)

This is new and still in the consultancy process (so it is not yet available) here is an insight to the proposal.

Why is an ERO necessary?

It has been introduced to provide a short term legal way of relief to a debtor that finds him/herself unable to meet their obligations through a sudden and unforeseen change in their financial circumstances from which they are likely to recover.

The key points

• No need for there to be a judgement debt
• Orders limited to a period of 12 months during which creditors cannot enforce the debt without the leave of the court
• Consideration must be given to creditors' objections to an order, grounds for this not yet defined
• The court can require the debtor to update them with his/her finances and any disposal of assets
• A repayment programme set up during the order if the debtor has sufficient surplus funds to so
• The debtor will by order of the court make aware of any changes to their occupations, marital status etc as the inc & exp which dictates the monthly basis will only be reviewed every 12 months
• Debtor to inform the court of any windfall or money gain in excess of £500

Assets in an ERO

Proposed exemptions

• Tools, vehicles used by the debtor for work purposes
• Clothing, bedding, furniture and household equipment necessary for basic needs 
 

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