Debt Relief Order FAQs
Baines & Ernst is one of the few commercial companies approved by the Secretary of State to provide Debt Relief Orders. We provide the Debt Relief Order for free, so if you want to know if you qualify for a DRO and see if it is the best solution for you, simply contact us; we’ll be happy to help.
We provide the Debt Relief Service for free, however a fee of £90 is required and this must be paid directly to the Insolvency Service to process the Debt Relief Order.
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.
No, Debt Relief Orders are aimed at people with little assets, a low disposable income and who cannot afford to repay their debts.
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 as an appropriate solution and they will be offered an alternative form of debt help.
No, the courts do not get involved in Debt Relief Orders.
Debt Relief Orders are provided by The Insolvency Service.
The Debt Relief Order typically lasts for a period of 12 months. After this time you will be freed from the debts included in the Debt Relief Order.
During this time, lenders cannot pursue you for payment or petition for your Bankruptcy.
Only unsecured debts can be included in a Debt Relief Order. This includes personal loans, payday loans, bank overdrafts, store cards, credit cards and catalogue accounts.
The Debt Relief Order lasts for 12 months, after this time you will usually be freed from the debts included in the DRO – 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
- Student loans
- 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, but this will be discussed with you before you proceed with 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 affected in the medium term, but once your debts are clear, you will be able to focus on rebuilding your credit record once again.
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 cannot 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.
- 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.
We do not charge for the DRO service, but there is an application fee of £90 which needs to be paid to the Insolvency Service.
You can also view a free publication from the Insolvency Service ‘Guide to Debt Relief Orders’.
Getting in touch with us is easy – simply call us on the number at the top of the screen or complete the enquiry form and a member of our team will call you back.
If you are an existing customer and would like the Baines & Ernst customer services number, please visit our contact us page.