Easy process for Islanders to clear debts of under £20,000

Friday 11 December 2015

Islanders will be able to have debts of up to £20,000 wiped clean under reforms aimed to clean up bankruptcy laws and stop people struggling with unpayable bills.

People aged over 18 with less than £5,000 worth of assets will be able to apply for relief from debts, if they can prove that they have less than £100 in monthly disposable income.

Applications will be considered by a court officer, who will be able to take into account whether the person seeking to be let off debts has run up debts that they knew they couldn’t pay, whether they’ve gambled or spent extravagantly or whether they’ve been guilty of fraud.

But some debts won’t be able to be wiped clean under the new system – any payments relating to maintenance, tax owed or court damages will be exempt from being written off.

The proposals, which were put together by Chief Minister Ian Gorst, are due for debate by politicians on 2 February.

Under the rules, the Citizens’ Advice Bureau would have to help applicants to put together the necessary paperwork.

In his report accompanying the proposition, Senator Gorst wrote: “It is hoped that the draft Law now lodged strikes a proper balance between: on the one hand, affording a ‘breathing space’ to hard-pressed debtors who are in severe financial straits not of their own making (and for whom désastre is not an appropriate remedy); and on the other hand, affording a fair measure of protection for creditors against potential abuse of the right to release from certain debts for which the Law provides.”