What is a Debt Relief Order?
Debt Relief Orders come into force on 6th APril 2009, and they are aimed at people who in relatively low levels of debt, but have low income, few assets and are unlikely to be in a position of paying off their debts in a reasonable time frame.
The specifics are as follows:
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You must be unable to pay your debts.
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You must owe less than £15,000.
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You can own a car to the value of £1000 but the total value of other assets must not exceed £300.
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After taking away tax, national insurance contributions and normal household expenses, your disposable income must be no more than £50 a month.
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You must be living in England or Wales, or at some time in the last 3 years have been living or carrying on business in England or Wales.
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You must not have been subject to another DRO within the last 6 years.
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You must not be involved in another formal insolvency procedure at the time you apply.
A Debt Relief Order lasts for 12 months, during which time, any creditors named on the order cannot take action to recover their money without permission from the court. At the end of the period, if your circumstances have not changed you will be freed from the debts that were included in your order.
DROs do not involve the courts, but are run by The Insolvency Service in partnership with skilled debt advisers, called approved intermediaries, who will help you apply to The Insolvency Service for a DRO.
There is a fee of £90, which gets paid to the official receiver, before your application will be considered.