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Islanders too poor to get themselves out of debt and too poor to become bankrupt have a new law to help them get back on their feet.
They can now apply to get up to £20,000 wiped clean thanks to the Debt Remission Law that came into force on Friday.
Anyone aged over 18 with less than £5,000 worth of assets will be able to apply for relief from them, if they can prove that they have less than £100 in monthly disposable income.
Citizens Advice will help people prepare all the paperwork and refers cases to the Viscount's Department.
Malcolm Ferey from the Bureau said: “Firstly this isn’t a debt remedy for everybody. There is financial criteria and an adversity test - people with a long-term illness, loss of employment, death of a partner etc.
“The people who will be helped will be fairly small in number, in the tens rather than the hundreds, but the difference it’s going to make to these people’s lives in tremendous.
“It’s for people who have no realistic chance of paying off their debt – they stop opening their doors, they stop answering the phones and they stop opening their mail.
“This will give them some breathing space, and an opportunity to pay off what they really can, and if they can’t, a chance to move on after the 12 months.”
Applications will be considered by a court officer, who will 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.
Once a Debt Remission Order is granted, a 12 month ‘moratorium’ period is put in place when creditors can't make further attempts to recover the debts and the debtor can't get any further credit for any more than £500. After the 12 months, all the debts are written off.
Mr Ferry said: “If you stripped this right back, these are people who are too poor to go bankrupt – to cover the court costs. Any court actions or remedies have costs attached to them.
“Because it’s an out of court settlement – it plugs that gap."
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