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Miss Johnson: Consideration was given to that and several other possibilities. We thought that there were considerable practical difficulties with such a suggestion and that it might have a downside for creditors. Although it is realistic to say that the home should be taken into consideration within the three-year period and that vesting should take place, it might be better for creditors if it is disposed of a year down the line. That seems perfectly reasonable. However, it is not reasonable for the issue to arise 10 or 15 years later or for the home not to be recognised as an asset earlier.
We have tried to seek a balance. The distinctions between benign and malign or recklessness and bad luck do not come into play; it is a question of how the home is dealt with in the bankruptcy. We seek certainty while giving the trustees time to achieve a good realisation of the assets for the creditors. It is important that a time scale exists, which is why we have chosen the period of three years and tabled new clause 6.
Mr. Waterson: May I urge the Under-Secretary not to be so quick to dismiss the comments of the anonymous correspondent? I could understand that if his comments were in capital letters and green ink and liberally sprinkled with four-letter words. However, they seem closely argued and based on long experience of how things work. Does she accept or reject the practical points that he makes? She cannot get away with merely saying that, because the comments are anonymous, she does not need to deal with them. Does she accept the central thesis that there are any number of reasons for a delay in a home becoming available as an asset in a bankruptcy?
Miss Johnson: Of course there are a number of reasons for delay, but I have made it clear that the new clause already recognises that point. It is reflected in its drafting and in the provisions that will be made if it becomes a part of the Bill.
The hon. Member for Orkney and Shetland (Mr. Carmichael) said that the issue of low-value properties was of particular concern to him, and the hon. Member for Eastbourne said that it was among his list of concerns. It may be a high or low-value property, but the degree of equity in it is a separate matter. The provision will therefore deal with cases in which there is little or no equity in the property and the cost of disposal may be disproportionate in relation to the funds that could be realised for the estate by the property's sale. The provision will not apply in every case, only when there is an application for a charging order or an order for sale.
The value will be set in the light of extensive consultation with interested parties, which is the point made by the hon. Member for Eastbourne. There will be extensive consultation, and our intention is to make that clear in rules; it is not an appropriate matter for primary legislation, not least because of the changes that occur to the way in which the property market works. Equity in housing may or may not exist.
Mr. Carmichael: I am grateful to the Under-Secretary for that clarification, but the amount of equity in a property will largely depend on the health of the property market in a particular area. Although I appreciate the point that it is not necessarily a question of the value of the property itself, there will still be great disparities between different parts of the nation.
Miss Johnson: I accept that. We are all aware of the huge disparities. Indeed, those hon. Members who are in the Chamber represent constituencies with wildly differing house prices. The important consideration, however, is that we tease out in discussion how the rule will work and what figure should be used. For that reason, we believe that it is not appropriate to include it in the Bill. Instead, we should return to it in more detail after consultation.
The new clause does not encourage people to gamble with other people's money. I thought that that suggestion was beneath the hon. Member for Eastbourne. It is patently about providing a degree of certainty and balance that is currently missing. Many professionals in the insolvency sector recognise that it would be desirable to address that problem. It would make things fairer because a balance needs to be struck. The new clause will do that and it merits the support of the House.
'.The following shall be inserted after section 415(3) of the Insolvency Act 1986 (Fees orders (individual insolvency proceedings in England and Wales))
"(3A) An order under this section shall provide for:
(a) exemption from any fees payable under this section by applicants who, at the time when a fee would otherwise be payable, are in receipt of income support, incomebased jobseekers allowance, working families tax credit or disabled persons tax credit (working tax credit and pension tax credit from April 2003) and any other benefit that the Secretary of State may by order specify;
(b) remission of all or part of any fees payable under this section where the Secretary of State considers that the payment of any fees payable under this section would, owing to the exceptional circumstances of the particular case, cause undue financial hardship;
(c) a reduction in the fees payable under this section where:
(i) two or more people live in the same household petition for bankruptcy at the same time, and
(ii) they are jointly and severally liable for at least one debt in both petitions;
(d) payment of any fees payable under this section by instalments.".'.[Mr. Waterson.]
The aims of the new clause are fairly straightforward. It is based on briefing material and a draft amendment produced by the National Association of Citizens Advice Bureaux, which has wide experience of advising people with debt problems. By the standards of some bankrupts whom we have vilified, some people have modest debts, but they still have no way of paying them off in a reasonable working life. It may not matter for our purposes whether they are benign or malign bankrupts or would-be bankrupts, to use the terminology of the hon. Member for Hemel Hempstead (Mr. McWalter); what matters is that they simply cannot afford to go bankrupt, even if their citizens advice bureau or Member of Parliament advises them that that would be in their best interests. We are not claiming that bankruptcy should never happen and is not appropriate. In some cases, it is the best, if not the only, option.
I hope that the new clause is clear. First, it would remove financial exclusion from bankruptcy for people on means-tested benefits and tax credits by exempting them from paying court and deposit fees. Secondly, it would help people on low incomes to pay those fees by allowing for remission of all or part of those fees and providing for payment by instalments. Thirdly, it attempts to deal with the situation when both people in a couple find it appropriate to apply for bankruptcy at the same time. All that is against the background of an enormous growth in the financial advice given by citizens advice bureaux. They have seen a 39 per cent. increase in consumer credit debt problems in the past four years alone. Last year, they advised on debt and equivalent problems totalling £1.2 billion, so they know what they are talking about.
Almost by definition, citizens advice bureaux advise people who perhaps cannot afford to, or would not usually see, an accountant or an insolvency practitioner but who are at their wits' end because they cannot find a way through the debts that they have accumulated. For many people whom they advise, bankruptcy is the only way to obtain a fresh start. They also say that the administration order process in the county court does not apply if someone owes more than £5,000 or has debts that are not the subject of county court judgments.
Typically, citizens advice bureaux advise people who have debts of £10,000 or more, and I gave one of their worst examples of that in Committee. A local authority tenant, who was employed, managed to run up debts of £33,000. She went to the CAB after considering committing suicide and being depressed about the problem. It advised her that bankruptcy was the best option because otherwise it would take her at least 20 years to repay the debts. The official receiver decided not to make an income payment order or to sell any of her goods. In that legitimate case, a weight was lifted off the shoulders of that lady who, for whatever reason, ran up debts that she had no way of repaying. Another CAB in Sussex dealt with a case in which a £5,000 loan grew to more than £18,000. That caused enormous stress and again the person involved was advised to go bankrupt.
NACAB makes the point that in England, Wales and Northern Irelandas opposed to Scotland, where it is much cheaperit costs £370 to go bankrupt. We are in cloud cuckoo land if we think that the people we are
The Minister gave part of the answer in Committee. She said that some debtors can seek a waiver or reduction of the £120 court fee. As the hon. Member for North-East Derbyshire (Mr. Barnes) and I made clear, that still leaves £250 that is not covered by the waiver provisions. The Minister was uncharacteristically unsympathetic to the proposal. She stated that waiving all the fees in hardship cases would not be justified and
My final suggestion in Committee, before giving up and promising to raise the matter on Report, was that there may be some merit in reconsidering the £5,000 limit for the county court provisions. The Minister was good enough to say that she would reflect on that point, so let us hope that she has done so and that she has proposals to change the situation.
I stress once more that we are talking about a not insignificant number of people who are excluded from the bankruptcy process for one reasonthey simply cannot raise the money to pay the costs necessary to start bankruptcy proceedings, even when they have been advised by organisations such as citizens advice bureaux that it is the appropriate course of action and, in some cases, the only way out of their debt problems. We were disappointed when the Minister was somewhat unsympathetic in Committee; I hope that she will be more sympathetic today.