Enforcement Restriction Orders - UK

The following information was initially reported by the TimesOnline on the release of the Enforcement Restriction order. Excerpts of the article are below and the full article can be found online, “Government’s court order plan will allow people in debt to keep their creditors at bay“.

Excerpts:

Borrowers will be allowed to stop repaying debts by taking out a court order, under radical plans outlined yesterday by the Government.

The plans, which were outlined in a consultation paper yesterday by the Ministry of Justice, would allow consumers who fall into financial difficulties through a change of circumstance, such as losing their job or divorce, to stop making repayments on personal loans, credit cards and other debts for up to a year by applying for an “enforcement restriction order” (ERO).

Bridget Prentice, the Civil Justice Minister, said: “We want to ensure that people who run up debts are given every opportunity to pay them off.”

There would be no upper limit on the debts on which a borrower could stop making repayments under the terms of an ERO but the borrower would have to show that he or she could start to make repayments when the ERO came to an end. The fee for setting up an ERO has not been decided.

The interest on borrowers’ debts would, in most cases, continue to accrue during an ERO but borrowers would not be charged penalty charges or other fees while an order was in force.

A spokesman from the Ministry of Justice said: “It is not the Government’s intention that the ERO will provide an interest ‘holiday’.”

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