As a simpler form of bankruptcy for those without assets, Debt Relief Orders were introduced on 6th April 2009 as a way to help individuals with severe hardship reduce their debt burden and give access to a form of insolvency which may previously have been beyond their financial means.
For a fee of only £90, a Debt Relief Order gives an individual the chance to potentially write off their debt and start again without the need to pay the hefty fees which are associated with bankruptcy.
Unfortunately not everybody qualifies for a Debt Relief Order and there is a very strict criteria in place to determine who is eligible for this service and who needs to look at other solutions.
To qualify for a DRO, all of the following must apply to you: oDebts no greater than £15,000.
oMust not be a home owner oTotal assets must not exceed £300 (although a vehicle worth up to £1000 is allowed).
oDisposable income after having paid all essential household bills of no more than £50.
oMust live in England or Wales (or have lived / carried out business in England and Wales within the last 3 years) oMust not be involved in another formal insolvency procedure (e.
g.
IVA / Bankruptcy) at the time of the DRO If you meet all of these criteria then a Debt Relief Order may be appropriate for you and you could potentially be able to have your debt written off.
However, not everything in the garden is rosy and there are several major points that you should bear in mind.
Under a Debt Relief Order, similar to the restrictions associated with bankruptcy: oYou will not be able to obtain credit of more than £500 without declaring that you are subject to a DRO.
oYou will not be able to be involved in the promotion, formation or management of a limited company without the court's permission.
oYou will not be able to act as director of a limited company without the court's permission.
oShould your circumstances improve during the DRO (e.
g.
pay rise, inheritance etc) then this must be reported to the Official Receiver who may decide that you are capable of paying your debts and terminate the DRO.
Additionally, a Debt Relief Order will not necessarily take all of your debts into account.
Court fines, secured debts and secured debts are all excluded from the DRO and would need to be paid off directly.
Due to the qualifying criteria, the possible restrictions and the numerous other potential solutions, only a fraction of individuals struggling with their debts will qualify for a DRO.
It is highly recommended that you seek professional advice prior to making a decision with your financial future.
For a fee of only £90, a Debt Relief Order gives an individual the chance to potentially write off their debt and start again without the need to pay the hefty fees which are associated with bankruptcy.
Unfortunately not everybody qualifies for a Debt Relief Order and there is a very strict criteria in place to determine who is eligible for this service and who needs to look at other solutions.
To qualify for a DRO, all of the following must apply to you: oDebts no greater than £15,000.
oMust not be a home owner oTotal assets must not exceed £300 (although a vehicle worth up to £1000 is allowed).
oDisposable income after having paid all essential household bills of no more than £50.
oMust live in England or Wales (or have lived / carried out business in England and Wales within the last 3 years) oMust not be involved in another formal insolvency procedure (e.
g.
IVA / Bankruptcy) at the time of the DRO If you meet all of these criteria then a Debt Relief Order may be appropriate for you and you could potentially be able to have your debt written off.
However, not everything in the garden is rosy and there are several major points that you should bear in mind.
Under a Debt Relief Order, similar to the restrictions associated with bankruptcy: oYou will not be able to obtain credit of more than £500 without declaring that you are subject to a DRO.
oYou will not be able to be involved in the promotion, formation or management of a limited company without the court's permission.
oYou will not be able to act as director of a limited company without the court's permission.
oShould your circumstances improve during the DRO (e.
g.
pay rise, inheritance etc) then this must be reported to the Official Receiver who may decide that you are capable of paying your debts and terminate the DRO.
Additionally, a Debt Relief Order will not necessarily take all of your debts into account.
Court fines, secured debts and secured debts are all excluded from the DRO and would need to be paid off directly.
Due to the qualifying criteria, the possible restrictions and the numerous other potential solutions, only a fraction of individuals struggling with their debts will qualify for a DRO.
It is highly recommended that you seek professional advice prior to making a decision with your financial future.
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