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Debt Relief Orders

Author: Chris Millar

A Debt Relief Order (DRO) applies for debtors with few realisable assets and minimal, if any, surplus income beyond their reasonable needs.  

The eligibility for applying for such a DRO is the debtor:-

  • Is unable to pay their debts.
  • Has total debts of less than £20,000.
  • Has total assets of less than £1,000.
  • Has a disposable monthly income (after tax, NI and household expenses) of less than £50. 
  • Is domiciled in England and Wales.
  • Is not subject to any other formal insolvency procedure at the time of the Application.
  • Has not had the benefit of a DRO in the 6 years before the determination of the Application. 

The Application is made on-line to the Official Receiver (OR) through an approved intermediary and the fee is £90. 

Debts excluded from a DRO are:-

  • Any fine or any obligation made arising in family or children proceedings.
  • A student loan.
  • An obligation arising under a criminal confiscation order.
  • Any debt for liability to pay damages for negligence, nuisance or breach of duty.
  • Any crisis or budgeting loan.

Further, secured debts are not qualifying debts. 

A DRO provides the debtor with a year’s protection from the creditors taking steps to enforce their debts without Court permission, and at the end of the year, the debtor is discharged from their liability for those debts. 

The DRO is administered by the Insolvency Service in conjunction with the intermediary debt advisers, but quite frankly it’s a “pass go, without payment”. 

Objections can be made to the OR with regard to the making of a DRO but these are probably unlikely to succeed, unless in exceptional cases.  Who would bother in any event? 

A creditor may apply to the Court for an Order revoking or amending the DRO, if dissatisfied with the OR’s conduct in making the Order or otherwise in their administration of the Order, but again who would bother? 

If only students could apply!

Posted on 06/02/2018 by Pam Bowring

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