More people with chronic debt problems are having their debts written off following a change to the rules – but both creditors and debt support organisations are critical of the new system.
The guidelines for calculating repayments were changed on July 1 to include a baseline figure reflecting essential living costs. If a debtor’s income is below this level their repayments are set at zero.
If the creditor refuses to accept the terms, debt advisors can ask a court to cancel the debt on the grounds that the debtor has no capacity to repay it. Several judgments to this effect have been issued since July.
Around 35% of debtors have had their liability reduced to zero since the new rules came in in July, according to an analysis by debt…
