A third of those in formal insolvency procedures are harassed by creditors

June 14, 2010 - PRLog -- “It is astounding that individuals continue to be hounded by creditors despite coming under the protection of statutory insolvency procedures,” commented Steven Law, R3 President. “The decision to file for bankruptcy is a difficult one that, once taken, is meant to stop the endless contact from creditors. That such a large proportion of bankrupts are not afforded the peace of mind they are entitled to is of grave concern.”

Interestingly, the research shows that a similarly high proportion (44%) of people in an informal insolvency procedure known as a Debt Management Plan (DMP) continue to be chased by their creditors.

Law continued: “The fact that the same percentage of bankrupts and people in a DMP are hassled by their creditors suggests that no matter what procedure a person is in, they can still be contacted. Either creditors need to ensure their records are up to date or they need to play by the rules.”

R3 is also calling for a ‘single gateway’ procedure into personal insolvency to stop the ‘insolvency journey’ whereby debtors start off in one procedure only to discover they were poorly advised and better suited to another. R3’s research highlights that almost a third of those who are currently undergoing bankruptcy were in a DMP before becoming bankrupt.

“We believe an assured moratorium from the Court for up to 28 days would provide a breathing space for debtors to consider every option, and enjoy a respite from creditor pressure. During that period they would be obliged to seek professional advice before making a decision.”

“The range of debt solutions both regulated and unregulated is deeply confusing for an individual in potentially the most stressful period of their life. They should be applauded for taking action to bring resolution to their finances and make a fresh start, not pressured by their creditors once they have acted to deal with their affairs,” concluded Steven Law.


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