Debt Relief Orders

The first official numbers for Debt Relief orders are out, which are not amazing, but better than the numbers that were being discussed a few months ago.

The numbers released say that 1,978 people in England and Wales took out a DRO during April, May & June 2009 - the first three months of the service being available. The earlier numbers suggested much lower take up.

The numbers though, are still relatively low. In the same period, there were 18,870 bankruptcies and 12,225 IVAs, so Debt Relief Orders are obviously not being taken up or offered so often.  It is still believed that the inclusion of pensions into the pot of assets taken into account by a DRO is one of the biggest issues here.

One of the biggest issues that is stopping many DRO applications is the fact that virtually any pension plan will break the £300 assets limit, as we have discussed in the past. But one group of people unlikely to have any kind of pension provision are students.

The life of a student nowadays is a long way from the commonly held memory of student grants and long days spent in the pub arguing about philosophy. The reality is that students are under financial pressure from the day they start. Having to take out student loans to cater for the lack of a student grant is one thing; the increase over the years of rent and cost of living is another. But basically, many students come out of University with a huge debt, and little money coming in initially.

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Despite the early optimism about DROs, and the fact that they could help many thousands of people stuck in the debt trap, Accountancy Age is reporting that only between 50 and 70 have actually been granted by the Official Receiver.

Early predictions of 150,000+ by the end of the year look to be missed by a massive margin. Read the rest of this entry »

When you start a Debt Relief Order, there is a Moratorium Period placed on the debts listed in your DRO. But what does this mean, and what are the implications?

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As debt relief orders begin to gain traction and become a useful tool in the insolvency practitioners toolkit, some are asking whether the process is open to fraudulent claims, due to the lack of resources and powers of investigation available.

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One of the key parts of a Debt Relief Order is that you must have £50 or less disposable income per month. But how exactly do they decide on what your disposable income is? Well a member of Money Saving Expert has managed to find out from a CCCS representative…

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A minor point of difference between the details surrounding a Debt Relief Order and full bankruptcy is how pension funds are treated, and this could make the world of difference to your application.

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Although none of the approved intermediaries have come and publicly with details on debt relief order uptake, anecdotal information seems to imply that they are all being inundated with applications, to the point that various internal systems crashed badly initially. This has meant that many people applying on, or slightly after the launch date have still to have their first appointment with their chosen intermediary.

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Debt Relief Orders can only be applied for via an approved intermediary. These intermediaries have been authorised as being able to assist and advise individuals on the completion of a DRO application. They are authorised by companies considered to be competent authorities. The list below lists the initial list of competent authories issued by the Insolvency Service, and able to help you find an approved intermediary:

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If you are able to qualify for a DRO, there are some consequences which you will need to be aware of, which may affect how you feel. In reality, these consequences will be nowhere near as bad as the initial debt for many people that DROs are targetted at.

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