Debt Relief Orders (DROs)

DROs 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 £30,000.

» Have gross assets of less than £2,000.

» Have surplus income of less than £75 per month.

» Not be a homeowner.

Procedure

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 instalments.

The Official Receiver makes the DRO and notifies creditors.  No investigation is undertaken unless valid objection from creditors.

Effect

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.

Practical matters

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.

For more information and/or for a free initial meeting and confidential advice, without obligation, please call 01582 469700.