Debt Relief Orders

In the United Kingdom, Chapter 4 of the Tribunals, Courts and Enforcement Act 2007 introduced debt relief orders (DROs) as a new form of insolvency. A DRO is a simplified, quicker and cheaper alternative to bankruptcy in the United Kingdom, for those with debts of less than £20,000. ROs are suitable for debtors who have few or no assets (less than £300 and not homeowners) and little disposable income (less than £50 per month). It is possible to apply for a DRO without attending court and the fee is £90. The fee may be paid by instalments prior to applying for the order.

Debt relief orders are intended to provide debt relief for people in England and Wales if:

  • the debtor is unable to pay his/her debts;
  • the debtor’s total unsecured liabilities must not exceed £20,000;
  • the debtor’s total gross assets must not exceed £300 (this includes houses so homeowners will not be eligible); the debtor will usually be allowed to keep a car if it is worth less than £1000 or it has been adapted for them because they have a physical impairment that has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities;
  • the debtor’s disposable income, following deduction of normal household expenses, must not exceed £50 per month;
  • the debtor must be domiciled in England or Wales, or in the last 3 years have been resident or carrying on business in England or Wales;
  • the debtor must not have previously been subject to a DRO within the last 6 years;
  • the debtor must not be involved in another formal insolvency procedure at the time of application for a DRO, such as:
    • an undischarged bankrupt;
    • a current individual voluntary arrangement;
    • A current bankruptcy restrictions order or undertaking;
    • A current debt relief restrictions order or undertaking;
    • An interim order
    • A current pending debtor’s bankruptcy petition in relation to the debtor but the debtor has not been referred to the DRO procedure by the court as a more suitable method of debt relief;
    • A current pending creditor’s bankruptcy petition against the debtor but the debtor has not obtained the creditor’s permission for entry into the DRO process.

How do I apply for a DRO?

Make an appointment to see the Debt Adviser at your local Citizen’s Advice Bureau, but first ensure that you meet the criteria in terms of the above. It might also be useful if you made a list of your income and expenditure. Provided you are on low income / benefits, have debts totalling less than £15,000 and have no real assets, it is very likely that you will qualify.

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