Debt relief orders

By THIS IS MONEY
Updated:

 

Debt relief orders were launched in April 2009 and are aimed at those on low incomes with relatively small debts that cannot afford to go bankrupt.

Man with paperwork

Helping hand: if you can't afford to go bankrupt, debt relief orders are for you.

Filing for bankruptcy can cost borrowers between £385 and £485 depending on whether their income is above or below £14,600.

To get a DRO you must:

• owe less than £15,000
• have less than £50 a month spare income – after paying essential bills like rent or food
• have less than £300 worth of assets – motor vehicles are not included in this limit, you can usually keep your car if it is worth less than £1000 or you need it because you have a disability
• live, run a business or own a property in England or Wales – or have done so in the last three years
• not have applied for a DRO in the last six years

Debtors can apply for the order with the help of an advice intermediary. This adviser will prepare and scrutinise each case to ensure that it meets the requirements of the Debt Relief Order and then submit it to the official receiver from the Insolvency Service.

They will then issue the Debt Relief Order, side-stepping the expensive costs of the court and a judge.

The order will be a matter of public record as it will be entered on to the Insolvency Register and credit agencies will be able to use the information for their records. However, creditors will also be able to apply to have the order revoked.

The order will last for 12 months and, at the end of that time, the debt owed will be discharged, leaving the debtor debt free.

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- Updated by Tara Evans, January 2011

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