Debt Relief Orders (DRO)
If you have a low monthly disposable income debt solutions such as a DMP, an IVA and even Bankruptcy may not be suitable for your circumstances.
On 6th April 2009 a new debt solution, called a Debt Relief Order became available in the UK. As one of only six Competent Authorities at the time and the only commercial organisation approved by the Secretary of State, Baines & Ernst can offer Debt Relief Orders (DRO) as part of our extensive range of debt services.
Who will benefit from a Debt Relief Order?
Debt Relief Orders from Baines & Ernst are aimed at people living in England and Wales and can provide debt relief for people if:
- Your are unable to pay your debts
- Your total unsecured debts must not exceed £15,000
- You can own a car to the value of £1000 but the total value of other assets must be no more than £300
- Your disposable income, after taking away tax, national insurance and normal household expenses, must not exceed £50 a month.
- You've not previously had a Debt Relief Order within the last 6 years.
- You're not involved in another formal insolvency procedure when applying for a Debt Relief Order.
What is a Debt Relief Order (DRO)?
A DRO lasts for 12 months. In that time creditors named on the order cannot take any action to recover their money without permission from the court. At the end of the period, if your circumstances have not changed you will be freed from the debts that were included in your order. DROs do not involve the courts. They are run by The Insolvency Service in partnership with skilled debt advisers, such as Baines & Ernst, who will help you apply to The Insolvency Service for a DRO.
To enter into a Debt Relief Order (DRO) you must pay £90 to the Official Receiver, in full, before your application will be considered, which is much less than the £612 (dependent on your circumstances) needed to petition one's own Bankruptcy. The cost of a DRO is kept low as applications are made online (with the assistance of an approved debt advisor to act as an intermediary). To speak to one of Baines & Ernst's Debt Relief Order specialists call 0800 092 8004 or take the Express Debt Test now and see how Baines & Ernst can help.
What are the effects of a Debt Relief Order?
The effects of a debt relief order is similar to that of Bankruptcy. A DRO will remain on public record for 15 months, and like all adverse credit information will stay on your credit record for 6 years.
Under a Debt Relief Order the following will apply :
- The Official Receiver will make an entry on the Electronic Individual Insolvency Register (EIIR) showing your details and the fact that a DRO has been made against you.
- You may not obtain credit of £500 or more, either alone or jointly with someone else, without telling the lender you are within a DRO.
- You cannot trade (directly or indirectly) in a name that is different from the name under which you were granted a DRO, without telling all those with whom you do business, the name under which you were granted a DRO.
- You may not be involved (directly or indirectly) with the promotion, management or formation of a limited company, and may not act as a company director, without the court's permission.
- You will only be able to obtain a DRO once every six years.
- You have a duty to inform the official receiver of any change of address and any change in circumstances. You must give the official receiver any information they ask for.
- Creditors who are owed debts listed in the DRO cannot take any action for repayment of their debts during this moratorium without the permission of the court. Once this period has ended the debts listed in the DRO will be discharged and you will be free from those debts.
- During the period of the DRO you must carry on paying ongoing commitments, such as rent and utility bills.
- You will be responsible for any debts that you incur after a DRO has been approved but must not make any payments to any creditor who is included in the DRO.
You may also be subject to a Debt Relief Restrictions Order, similar to a Bankruptcy restriction order. This can extend the period of restriction for up to 15 years for debtors who are deemed dishonest or culpable to the extent of their financial difficulties. An example of this hiding assets or continuing to borrow knowing you have no chance of making the repayments. Details of the DRO will be shown on your credit file and your ability to obtain credit will be affected in the short term and might be affected in the medium to long term.