DRO FAQs

1. What is a debt relief order (DRO)?
2. Who will benefit from a Debt Relief Order?
3. Are DROs just an easy way for people to run up debts then get them written off?
4. Do I need to go to court to get a DRO?
5. How do I apply for a DRO?
6. How much does it cost to get a DRO?
7. How long does the DRO last?
8. Will a DRO free me from all my debts?
9. Will there be any restrictions on me during the period of my DRO?
10. Will my DRO be advertised?
11. Will I be able to keep my car?
12. What if my car is worth £1,200 and my other assets are worth less than £100, will I be able to apply for a DRO?

What is a debt relief order (DRO)?

A debt relief order is a formal insolvency process for people who cannot pay their debts and who have a low level of debt, little surplus income and few assets.

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 debts can’t be paid
• Your total unsecured debts must not exceed £15,000
• You have no more than £300 of gross assets *
• Your disposable income, after 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

* Excluded from the £300 gross assets figure are motor vehicles up to the value of £1000, clothing, bedding, furniture, household equipment and other basic items you and your family need in the home.

Are DROs just an easy way for people to run up debts then get them written off?

No. DROs 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, a DRO is not an appropriate solution and other debt solutions are available.

Do I need to go to court to get a DRO?

No, the courts do not get involved in Debt Relief Orders. DROs are run by The Insolvency Service in partnership with skilled debt advisers who will help you apply to The Insolvency Service.

How do I apply for a DRO?

We can provide you with advice and help you apply for a Debt Relief Order, just complete the form opposite or call one of our experienced advisors for expert advice on your situation on 0800 096 1331.

How much does it cost to get a DRO?

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.

How long does the DRO last?

The DRO will place a moratorium period upon the debts owed by you. Creditors cannot take any action for repayment of their debts during this moratorium without the permission of the court. Once this period has ended (usually after 12 months) the debts listed in the DRO will be discharged and you will be freed from those debts.

You will be responsible for any debts that you incur after a DRO has been approved. You must not make any payments to any creditors who are included in the DRO once your DRO is in place.

Will a DRO free me from all my debts?

After the period of the DRO has ended you will usually be free from the debts included in the DRO, except where a creditor 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 DRO. The debts which cannot be included are:

• 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.

Will there be any restrictions on me during the period of my DRO?

Yes. The restrictions are those similar to the restrictions of bankruptcy.

These restrictions include:

• You must not obtain credit of £500 or more, either alone or jointly with another person, without telling the lender that you are subject to a DRO.
• You may not carry on a business (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, formation or management of a limited company, and may not act as a company director, without the court’s permission.
• You cannot apply for a DRO if you have been subject to a previous DRO within the last 6 years.

The official receiver will be able to apply for a debt relief restrictions order, which will extend the period of restriction for up to 15 years if they find you have been dishonest before or during your DRO.

You can also view a free publication from the Insolvency Service ‘Guide to Debt Relier Orders’

(http://www.bis.gov.uk/assets/bispartners/insolvency/docs/publication-pdfs/droguide.pdf)

Will my DRO be advertised?

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.

Will I be able to keep my car?

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.

What if my car is worth £1,200 and my assets are less than £100, can I apply for a DRO?

You will not be able to apply for a DRO as the maximum allowable value for your car is £1,000 and the £300 asset limit is for other assets.