Debt Relief Orders

Debt Relief Orders (DRO) came into force in the United Kingdom on April 6, 2009. They are a form of insolvency solution that assists people with no assets and minimal extra income. They are not obtained through the courts, unlike other debt solutions.

To qualify for a DRO you have to have debts of less than £15,000 and have no more than £300 worth of total gross assets. Debt Relief Orders were designed to provide a solution for people unable to back pay their debts within a reasonable period of time and for those people that are unable to improve their financial circumstances.

The full Criteria are as follows:

• Your must be a resident of England or Wales
• Your total monthly disposable income is less than £50 per month
• Your total unsecured debts is less than £15,000
• Your total assets are less than £500
• You have not had a Debt Relief Order in the last 6 years and are not currently in any other form of insolvency solution, such as bankruptcy

To apply for a Debt Relief Order you must seek the financial advice of a debt adviser. After that an approved intermediary can help you put together your DRO application. The intermediary can charge a fee for their time but it cannot be any more than £100.

After the application has been made and the payment received, an Official Receiver can make the order. If you meet the criteria, the process will go ahead.

Debt Relief Order : The Process

During the term of a Debt Relief Order, you will be protected against any action by the creditors that have been included in your application. The entire process takes one full year but you can apply to extend the order or to change certain restrictions.

If your circumstances change you will have to let this information be known to your Official Receiver. If you come into a financial windfall, for example, you will be required to pay back your creditors.

Restrictions

There are a number of restrictions when you enter a Debt Relief Order:

• You must not take on more than £500 in credit without disclosing this fact
• You must not be involved with the management or formation of a limited company or act as a director with the permission of the court
• You must not carry on business in a different name after being granted the DRO without contacting the people who you have done business with under your previous name
• You will only be able to obtain a Debt Relief Order once every six years

These restrictions may be extended if the Official Receiver determines that you have acted dishonestly or improperly.

Are you eligible for a Debt Relief Order ?