Debt Relief Order FAQs
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 your 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.
- Lenders 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 the DRO service; however there is an application fee of £90 which is paid to the Insolvency Service.
You can also view a free publication from the Insolvency Service ‘Guide to Debt Relief Orders’
No. Debt Relief Orders are aimed at people with little assets and a low disposable income with no other access to debt relief and no prospect of their current situation improving. If people do have assets or there is a possibility of an improvement in financial circumstances, then a Debt Relief Order would not be considered appropriate for their circumstances and they may be offered an alternative debt solution.
No, the courts do not get involved in Debt Relief Orders.
Debt Relief Orders are provided by The Insolvency Service in partnership with skilled debt advisors who will help you apply to The Insolvency Service.
We can provide you with advice and help you apply for a Debt Relief Order, just call one of our experienced advisors for expert advice.
The cost of an application for a Debt Relief Order is just £90. If you cannot afford to pay in full immediately you can pay in instalments depending on your situation. You must pay the full £90 within 6 months of paying the first instalment. The fee must be paid in full before the official receiver will consider your application.
The Debt Relief Order will place a suspension period on the debts owed by you. Lenders cannot take any action for repayment of their debts during this suspension without the permission of the court. Once this period has ended (usually after 12 months) the debts listed in the Debt Relief Order will be discharged and you will be freed from those debts.
You will be responsible for any debts that you incur after a Debt Relief Order has been approved. You must not make any payments to any creditors who are included in the Debt Relief Order once your Order is in place.
After the period of the Debt Relief Order has ended you will usually be free from the debts included in the Order, except where a lender has been given permission from the court to ask you for repayment of a debt.
There are some debts that cannot be included in a Debt Relief Order, such as:
- Court fines and any obligations from an order in family proceedings or under a maintenance assessment made under the Child Support Act 1991
- Any obligation under a confiscation order made under section 1 of the Drug Trafficking Offences Act 1986 or section 1 of the Criminal Justice (Scotland) Act 1987 or section 71 of the Criminal Justice Act 1988 or under Parts 2, 3 or 4 of the Proceeds of Crime Act 2002
- Secured debts: a DRO does not affect the rights of secured creditors to deal with their security. However, if you own secured property you are unlikely to qualify for a DRO, as your gross assets are likely to be more than £300.
- You should note that you must carry on paying ongoing commitments such as rent and utility bills during the period of the DRO and you will be responsible for any debts that you incur after a DRO has been made.
Details of your DRO will be put on the Electronic Individual Insolvency Register on the www.insolvency.gov.uk website
These details will be removed 3 months after your DRO has ended.
You will most likely to be able to keep it if it has been adapted for you because you have a physical impairment that has a substantial and long-term adverse effect on your ability to carry out normal day-to-day activities or if it is worth less than £1,000.
Unless there are specific reasons (such as those mentioned above) your car must not exceed £1,000 in value. If it is worth more than £1,000, you could be asked to trade it in for another vehicle of lower value, however this will be discussed with you before you proceed with a Debt Relief Order.