INSOLVENCY ENQUIRY LINE GUIDE
FREQUENTLY ASKED QUESTIONS
DEBT RELIEF ORDERS
Debt Relief Orders (DROs) are a formal insolvency process for people who have a relatively low level of debt which they cannot pay, little surplus income and few assets.
Can I apply for a DRO?
In order to apply for a DRO you must meet all the following requirements:
· You must be unable to pay your debts.
· Your total debts must be not more than £15,000.
· Your total gross assets must not be more than £300, but see the question Will I be able to keep my car?, below.
· Your surplus income, after taking off normal living expenses, must not be more than £50 per month.
· You must be domiciled (living) in England or Wales, or at any time during the last 3 years, have been resident or carrying on business in England or Wales.
· You must not have previously been subject to a DRO within the last 6 years.
· You must not be involved in another formal insolvency procedure at the time of application for a DRO, such as:
a) a current bankruptcy;
b) a current individual voluntary arrangement;
c) a current bankruptcy restrictions order or undertaking;
d) a current debt relief restrictions order or undertaking;
e) an interim order;
f) where you are currently petitioning for bankruptcy (asking a court to make you bankrupt) if the court has not referred you to the DRO procedure as a more suitable method of debt relief;
g) where a creditor is currently petitioning for your bankruptcy (asking a court to make you bankrupt), if you have not got the creditors permission before applying for a DRO.
How do I apply for a DRO?
Firstly by seeking advice from a debt adviser. If it appears that you are suitable for a DRO you will need to contact an approved intermediary (not necessarily the adviser who gave you advice). The intermediary will be able to assist you with completing the online application and submitting it to The Insolvency Service, who will consider whether you can have a DRO. The courts are not involved in DRO applications.
Only intermediaries who have been approved by a competent authority can assist you with the application.
The competent authorities are approved by the Secretary of State and a list of these authorities can be found below:
The National Association of Citizens Advice Bureaux (CAB)
Citizens Advice
Myddelton House
115-123 Pentonville Road
London
N1 9LZ
Website: www.citizensadvice.org.uk
Telephone Number: 0207 833 2181
The Foundation of Credit Counselling (Consumer Credit Counselling Service)
Consumer Credit Counselling Service
Wade House
Merrion Centre
Leeds
LS2 8NG
Website: www.cccs.co.uk
Telephone Number: 0800 138 1111
Institution of Money Advisers (IMA)
The Institute of Money Advisers
Stringer House
34 Lupton Street
Leeds
LS10 2QW
Website: www.i-m-a.org.uk
Telephone Number: 0845 094 2384/01132 420 048
Baines & Ernst Ltd
Baines and Ernst Ltd
Lloyds House
18-22 Lloyd Street
Manchester
M2 5BE
Website: www.bainesandernst.co.uk
Telephone Number: 0161 216 8107
National Debtline
National Debtline
Tricorn House,
51-53 Hagley Road,
Edgbaston,
Birmingham
B16 8TP
Website: www.nationaldebtline.co.uk/england_wales/
Telephone Number: 0121 410 6247
Payplan Ltd
Kempton House
Dysart Road
Grantham
Lincolnshire
NG31 7LE
Website: www.payplan.com
Telephone Number: 0800 716 239
Insolvency Practitioners Association
Insolvency Practitioners Association
Valiant House
4-10 Heneage Lane
London
EC3A 5DQ
Website: www.insolvency-practitioners.org.uk
Tele: 020 7397 6407
Advice UK
Advice UK
6th Floor
63 St Mary Axe
London
EC3A 8AA
Website: www.adviceuk.org.uk
Tele:020 7469 5700
Shelter
Shelter
Aegon House
30 Poole Hill
Bournemouth
Dorset
BH2 5PS
Website: www.shelter.org.uk
Tele:0844 515 1484
Christians Against Poverty
Christians Against Poverty
Jubilee Mill,
North Street,
Bradford
BD1 4EW
Tel: 0800 3280006
Website: www.capuk.org
Think Money
Think Money
Pennington House
Carolina Way
South Langworthy Road
Salford Quays
M50 2ZY
Tel: 0800 027 5930
Website: www.thinkmoney.com
How much does it cost?
The cost is currently £90. If you cannot afford to pay in full immediately you can pay in instalments to suit your financial situation. If you do this you must pay the full £90 within 6 months of paying the first instalment. The fee must be paid in full before the official receiver will consider your application.
How long does it last?
The DRO will place a moratorium period upon the debts included in it. Creditors who are owed debts listed in the DRO cannot take any action for repayment of their debts during this moratorium without the permission of the court. Once this period has ended (usually after 12 months) the debts listed in the DRO will be discharged and you will be freed from those debts.
Will a DRO free me from all my debts?
There are some debts that cannot be included in a DRO. You will still be responsible for paying these debts. Briefly, the debts which cannot be included are:
- magistrates court fines and any obligations from an order in family proceedings or under a maintenance assessment made under the Child Support Act 1991;
- student loans;
- any obligation under a confiscation order made under section 1 of the Drug Trafficking Offences Act 1986 or section 1 of the Criminal Justice (Scotland) Act 1987 or section 71 of the Criminal Justice Act 1988 or under Parts 2, 3 or 4 of the Proceeds of Crime Act 2002;
- secured debts a DRO does not affect the rights of secured creditors to deal with their security. However, if you own secured property you are unlikely to qualify for a DRO, as your gross assets are likely to be more than £300.
What restrictions are placed on me whilst I am in a DRO?
The restrictions include:
· You must not obtain credit of £500 or more, either alone or jointly with another person, without telling the lender that you are subject to a DRO.
· You may not carry on a business (directly or indirectly) in a name that is different from the name under which you were granted a DRO, without telling all those with whom you do business the name under which you were granted a DRO.
· You may not be involved (directly or indirectly) with the promotion, formation or management of a limited company, and may not act as a company director, without the courts permission.
· You cannot apply for a DRO if you have been subject to a previous DRO within the last 6 years.
The official receiver will be able to apply for a debt relief restrictions order, similar to the bankruptcy restrictions order, which will extend the period of restriction for up to 15 years if they find you have been dishonest before or during your DRO or that you are otherwise to blame for your position.
Will my DRO be advertised?
Details of your DRO will be put on the Electronic Individual Insolvency Register on our website: www.insolvency.gov.uk/eiir/ .
These details will be removed 3 months after your DRO has ended.
DROs are not advertised in your local paper or in the London Gazette.
Will I be able to keep my car?
You will most likely to be able to keep it if:
- it has been adapted for you because you have a physical impairment that has a substantial and long-term adverse effect on your ability to carry out normal day-to-day activities; or
- if it is worth less than £1,000.
What if it is worth more than £1,000 and my other assets are worth less than £300?
You will not be able to apply for a DRO as the maximum allowable value for your car is £1,000 and the £300 asset limit is for other assets.
Can I have a bank account?
You are permitted to open a new bank or building society account after the granting of a DRO. However, the bank or building society may require you to disclose that you are the subject of a DRO. It may then decide whether or not to permit you to open an account, and whether to impose any conditions or restrictions on the use of the account.
You should check with your bank regarding the continued use of any existing account.
I have a pension, can I apply for a Debt Relief Order (DRO)?
Yes. Under the changes to the Debt Relief Order rules from 6th April 2011, pensions which are approved are excluded from the calculation of assets in the DRO application.
What is an approved pension?
Approved pension arrangements are any occupational or personal pension schemes registered with the HM Revenue and Customs for tax purposes including all retirement
annuity contracts and stakeholder pensions. The definition includes the most common pension arrangements found in the UK.
I am already in receipt of my pension am I still eligible to apply for a DRO?
If you are already in receipt of your pension, it will be treated as income for the purposes of determining DRO eligibility
I will receive a pension during the moratorium period of the DRO, am I still eligible to apply?
If you begin to receive a pension during your DRO must inform the official receiver who will then consider whether it is appropriate to continue the DRO.
Can something be done where an individual has been granted a DRO who did not provide the correct information?
Yes. If you think that someone granted a DRO has not been forthcoming with information, you should tell the official receiver who will look into any information you provide and can revoke the DRO if it is appropriate.
How do I make a complaint?
If you have a complaint about your approved intermediary or their competent authority you should contact the competent authority.
If you have a complaint about the official receiver you should follow the procedure outlined in our leaflet Complaints Procedure on our website: www.insolvency.gov.uk/pdfs/guidanceleafletspdf/complaints.pdf .
How can I become an approved intermediary?
You can become an approved intermediary if you are a trained debt adviser and have been approved by a competent authority, so you must apply to one of the authorities.
Your application must show that you meet the legislative criteria, which are set out in Part 2 of The Debt Relief Orders (Designation of Competent Authorities) Regulations 2023.
/insolvencyprofessionandlegislation/DRORegulations2023final.doc
You may need training to become an approved intermediary and the competent authority should tell you what is required.
Where can I obtain further information?
Questions about the official receivers role and the DRO process should be addressed to The DRO Unit, The Insolvency Service, telephone 01752 635200 or email to DRO.Unit@insolvency.gsi.gov.uk
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