Personal insolvency law in England and Wales: debtor advice, debtor education and the credit environment
- Publisher: Kingston Business School, Kingston University
In July 2006 the Centre for Insolvency Law and Policy (CILP), Kingston Law School, Kingston University, received £20,000 research funding to undertake the current research project, Personal Insolvency Law in England and Wales: Debtor Advice, Debtor Education and the Credit Environment. The funding was provided by the Insolvency Service, an executive agency of the Department of Trade and Industry and Grant Thornton LLP, a leading accountancy firm. \ud \ud The project was originally scheduled to report in February 2007. It now reports in July 2008, to take into account the logistical difficulties faced in corresponding and in arranging meetings with creditors and debt advice and solution providers. For workaday purposes the project was christened PIP, after Personal Insolvency Project. This acronym will be used throughout this report. \ud \ud The project, as originally proposed consisted of three elements highlighted by the ‘Bankruptcy Courts Survey 2005’ (BCS) as warranting further investigation. These consisted of: (1) an examination of the role of IVA firms in the insolvency advice market; (2) the holding of a number of free personal finance management workshops, the holding of three Credit Responsibility Days, the creating of a Credit Responsibility Pack, an examination of pre and post bankruptcy petition education; and (3) an examination of bank lending practices to consumer debtors.\ud \ud Unfortunately, due to the poor uptake of the personal finance management workshops, it was decided that the Credit Responsibility Days would be postponed. The Centre is currently continuing the pilot workshops with a view to eventually into holding the proposed Credit Responsibility Days. As the main source of marketing for the Credit Responsibility Days, the Credit Responsibility Pack will not be trialled in local branches of high-street banks until suitable dates for the event have been finalised. A follow up report will be presented once completed in early 2008. \ud \ud Abstract\ud \ud This Personal Insolvency Project (PIP) research report is divided into three parts and two volumes. The three substantive parts are set out in Volume I and relate to the research areas of: (1) debtor advice, (2) debtor education, and, (3) the credit environment. Volume II contains all of the appendices pertinent to the three sections and the bibliography.\ud \ud The three areas that are examined in this report first came to the fore as points for consideration following the publication of the BCS. It was concluded following that report that a further investigation into areas impacting on personal insolvency should be investigated. This report is a further investigatory exercise. In essence, the major participants in the personal insolvency arena and the causes of the recent upsurge in personal insolvency usage were to be investigated, thus hopefully resolving the extremely important question of: what or who is responsible for the recent upsurge in insolvency procedure usage? This question, inter alia, has been addressed within this report.\ud \ud The three report sections include, inter alia, an examination of the advice function and general practices of debt solution companies (Part I), and an examination of the attitudes, procedures and approach of major credit providers to the law of insolvency (Part III). A resounding theme from the BCS was the lack of financial literacy amongst the respondents. As there has hitherto been a lacuna in English insolvency scholarship regarding debtor education it was decided that this should be addressed (Part II). There are obvious synergies between the three parts of the report. These are discussed in the main body and conclusions. \ud \ud The general abstracted conclusions of the PIP research can be seen in the following graphical representation of main findings.