The Debt Relief Order was established in April 2009 in order to help people who cannot obtain debt relief from any other source, be it Bankruptcy, IVA or a Debt Management Plan
A debt relief order is an order you can apply for if you can’t afford to pay off your debts. It’s granted by the Insolvency Service and is a cheaper option than going bankrupt.
You have spare available income of £50 or less a month after paying your normal household expenses
Your assets and any savings are worth £300 or less. However, if you have a motor vehicle, this must be worth £1,000 or less unless it has been specially adapted because you have a physical disability
In the last 3 years you must have lived, had a property or carried on a business in England or Wales.
How much does it cost?
What type of debts can be included in a debt relief order?
rent, utilities, telephone, council tax
benefit overpayments and social fund loans
hire purchase or conditional sale agreements ( these may involve returning goods)
What type of debts cannot be included in a debt relief order?
Child support and maintenance
How long will a DRC last?
Who can’t get a debt relief order?
you have an Individual Voluntary Arrangement (IVA) or are applying for an IVA
your creditors have applied to make you bankrupt but the hearing hasn’t yet taken place. But you might still be able to apply for a debt relief order if your creditors agree
you have been given a Bankruptcy Restrictions Order or Undertaking
you have petitioned for bankruptcy but your petition has not yet been dealt with. However, this doesn’t apply if you’ve petitioned for bankruptcy and the judge has referred you for a debt relief order instead
you have had a debt relief order in the last 6 years
you have been given a Debt Relief Restriction Order or Undertaking.
What restrictions will be placed upon a person who has a DRO?
You may not carry on a business (directly or indirectly) in a name that is different from the name under which they were granted a DRO, without telling all those with whom you do business the name under which they 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.
Furthermore the Official Receiver will be able to apply for a Debt Relief Restrictions Order, similar to the bankruptcy restriction order, which will extend the period of restriction for up to fifteen years for debtors who are dishonest or culpable.