Is a Debt Relief Order right for you?
DROs are available to those living in England and Wales who are struggling to repay substantial amounts of debt and have a low disposable income.
To qualify for a Debt Relief Order, you must meet the following criteria:
- You are unable to repay your debts
- Your total unsecured debts do not exceed £15,000
- Your assets do not exceed £300
- Your disposable income is no more than £50 per month (after paying general living expenses and bills)
- You are not involved in another formal insolvency procedure or have been in a DRO in the previous six years
Living with debt can be stressful, but with the right help and support, you can begin to work towards a future free from unsecured debt.
At Baines & Ernst, we’ll work with you to ensure you find a solution that works for you, your family and your budget. So, if you don’t qualify for a DRO, we will do our utmost to find a suitable alternative that will help you repay creditors at a rate you can afford and alleviate the pressure associated with debt.
You could also clear debt with the following services:
- Debt Management Plan (DMP)
- Individual Voluntary Arrangement (IVA)
- Consolidation
- Bankruptcy
- Protected Trust Deed and Sequestration (Scotland only)
Debt Relief Orders usually last for 12 months. Providing you cooperate fully with the Official Receiver handling your application, you can expect to be:
- Protected from creditors taking court action to recoup money
- Free from unsecured debts included in the DRO
The Insolvency Service has issued a great resource called ‘In Debt? Dealing With Your Creditors’, which is designed to help you decide which debt solution would be best suited to your situation.
The effects of a Debt Relief Order
The effects of a Debt Relief Order are similar to those of Bankruptcy. A DRO will remain on public record for 15 months, and will stay on your credit record for 6 years following completion. Your credit rating will be adversely affected in the long term and you will also find it difficult to obtain credit in the future.
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 in 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 those you do business with.
- 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 court 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 changes to your address or 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 period 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.
- You must continue to pay ongoing commitments, such as rent and utility bills, during the period of 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 medium to long term.
Baines & Ernst do not charge for our DRO service; however there is an application fee of £90 which is paid to the Insolvency Service.
Baines and Ernst Ltd