Debt relief orders (DRO) were introduced in April 2009 and are designed for the group of insolvent debtors who are unable to afford the costs of presenting their own bankruptcy petition. In order to be eligible for a DRO a debtor must:
» Have total liabilities not exceeding £15,000.
» Have gross assets of less than £300 (motor vehicles under £1,000 are not included in the calculation of total assets).
» Have surplus income of less than £50 per month.
» Not be a homeowner.
The debtor completes an online application in the presence of an authorised intermediary (usually the Citizens Advice Bureau) which is submitted to the Official Receiver. No Court involvement is required.
The debtor pays a fee of £90 which can be paid in installments.
The Official Receiver makes the DRO and notifies creditors. No investigation is undertaken unless valid objection from creditors.
Upon the making of the DRO a moratorium comes into effect preventing creditors from taking enforcement action, usually for 12 months. During this time the debtor is subject to the same restrictions as in bankruptcy.
The debts are discharged at the end of the moratorium period.
The debtor has a duty to co-operate with the Official Receiver.
DRO’s are recorded on the Individual Insolvency Register.
The Official Receiver can revoke the DRO if the debtor’s circumstances change during the moratorium period.
The debtor can become subject to a Bankruptcy Restrictions Order if found guilty of misconduct.