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Deputies have strongly supported proposals to help the small minority of people who have fallen into unmanageable debt spirals by removing legal requirements to repay a capped amount to lenders.
Low Value Debt Relief Orders will now be drawn up by the Committee for Economic Development which will allow for unsecured debt up to £30,000, alongside several other conditions, to be written off at the discretion of a Jurat.
Secured debts, criminal fines, child maintenance, and civil fines would be excluded from the orders. Any debt not listed in an approved order would also be ineligible for relief.
You can read about the policy letter in more detail HERE.
Deputy Nick Moakes, pictured above, introduced the proposals to the States Assembly on behalf of Economic Development on Wednesday morning.
He said: “In a relatively small number of cases, personal debt can become unmanageable… the impacts of the covid-19 pandemic and more recently the cost-of-living crisis have both highlighted the potential for global factors to contribute to unmanageable debt”.
Deputy Aidan Matthews, who contributed to a working group which informed the proposals, said the fact Guernsey has “no modern equivalent for personal bankruptcy” seems “almost Dickensian” considering debtors can face imprisonment if repayments are not met.
He noted the recent “turmoil” in Britain’s economy and the ever-increasing lending rates: “There is no guarantee that lenders will always act responsibly”.
Pictured: Citizens Advice work with approximately 100 individuals who have unmanageable levels of debt.
Deputy Sue Aldwell was the only politician to vote against the policy, worrying that it “could lead to a pattern” of individuals “not taking responsibility” for their personal finances if they have already experienced insolvency.
“If members of the Assembly agree that this would be the best way forward a solution could be for those to set up a fund between themselves and contribute, covering the debt rather than volunteering businesses.”
“People should take responsible for their own debts… there are mechanisms in place to help those in debt,” she added.
But Deputy Mark Helyar, also Chair of Citizens Advice Guernsey, emphasised that current mechanisms for assisting those in debt do not “discharge the legal requirement to repay the debt”.
“[LVDRO] enable them to discharge those debts so that they can have a clean record, because if you don’t have a clean debt record you can’t have a bank account, you won’t be able to get a flat because you can’t pay a deposit, you won’t be able to have a telephone because you don’t have an address to hold it from or an account to pay the money from… you may not have access to the internet because you have no data.
“This creates a whole layer of poverty that most of us never see. I’m not happy to say but I do get to see it because of the position I hold in a local charity and there are a number of people who are continuously bouncing along the bottom because they cannot discharge themselves from that position.”
Deputy Helyar added that it is a “travesty that since the 1930s this legislation has not been updated.”
Pictured: Deputy Mark Helyar used his personal experience as Chair of Citizens Advice to shine light on the issues the policy seeks to address.
Deputy Moakes disagreed with Deputy Aldwell’s assessment in his closing remarks, saying the introduction of legislation was necessary to protect against “less compassionate lenders” and that the eligibility criteria was “very strict”.
Pour: Blin, Brouard, Cameron, De Lisle, De Sausmarez, Dudley-Owen, Dyke, Fairclough, Ferbrache, Gabriel, Gollop, Haskins, Helyar, Inder, Kazantseva-Miller, Le Tissier, Leadbeater, Mahoney, Matthews, McKenna, Meerveld, Moakes, Murray, Oliver, Parkinson, Prow, Roffey, Soulsby, Taylor, Trott, Vermeulen.
Contre: Aldwell.
Ne vote pas: Queripel, Snowdon.
Did not vote: Falla.
Absent: Burford, Bury, Le Tocq, Roberts, St Pier.
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