A. Debt Relief Orders, or DROs, were introduced as a new type of debt solution by the Tribunals, Courts and Enforcement Act 2007. They’re only available to people living in England and Wales. DROs are designed to help people deal with their debts who:
You can read a more detailed overview here - Debt Relief Orders.
A. A Debt Relief Order isn’t suitable for everyone. To qualify for a DRO, you must meet a set of very strict criteria. These are as follows:
A. Just like bankruptcy, a DRO doesn’t cover every type of debt or liability. You’ll still be responsible for paying:
Your Debt Release Direct advisor will help you identify which of your debts can and can’t be included in your DRO application.
A. You can only apply for a Debt Relief Order through an approved intermediary, who’ll submit your application to the Official Receiver on your behalf. Debts.org.uk is one of just 12 debt management firms currently listed as a competent authority for DROs, so we can help if a DRO is considered to be a suitable option for you.
A. The Official Receiver (OR) will only consider your application for a Debt Relief Order if you pay the required fee to the Insolvency Service. At the moment, the fee is £90. It’s non-refundable, so you won’t get the money back if the OR declines your application. That’s why it’s so important for you to complete the DRO application form fully and accurately before sending it to us for submission.
A. An application for a Debt Relief Order can only be dealt with by an approved intermediary. This is usually an experienced debt advisor who’s been authorised by a competent authority to help and advise people with completing and submitting an application for a DRO. Debts.org.uk is a competent authority, so your application will be handled by one of our friendly and qualified DRO advisors.
A. The Official Receiver (OR) is an officer of the Insolvency Service. An OR is appointed by the Secretary of State and is an officer of the court to which they’re attached. Part of their job is to assess Debt Relief Order applications and manage DROs once they’re in place.
The OR also has several other responsibilities relating to DROs. These are:
A. You must:
A. If your Debt Relief Order goes ahead, you’ll need to comply with certain rules. These are:
A. If a Debt Relief Order is made against you, the Official Receiver (OR) will effectively ‘freeze’ all the debts listed within the DRO for a set time, called a moratorium period. This usually, but not always, lasts for 12 months from the date the DRO comes into force. During this time, you’re protected from your creditors and they can’t pursue you for payment or take any legal action against you. If your circumstances haven’t improved by the time the moratorium period comes to an end, the debts listed within the DRO will be written off.
However, if your circumstances do change and you become able to make payments to your creditors, the OR will consider whether or not to terminate the Debt Relief Order. If these changes come about towards the end of the DRO, you may be granted an extension to the moratorium period of up to three months, so you can reach an agreement with your creditors. During this extension, you’ll still have the same legal protection from your creditors and be subject to the same restrictions as for the first 12 months of your DRO (see below).
A. If your Debt Relief Order is approved, the Official Receiver will contact all the creditors listed in your application form to tell them about the DRO and that they can no longer take any action to recover your debts.
Once the DRO is in place, you’re not allowed to make any payments to creditors for debts that are included in it. However, you might want to seek independent advice about certain debts, such as rent arrears.
If your creditors ask you for payment during the DRO period, simply tell them that you’re subject to a DRO. If they keep contacting you or threaten you with enforcement proceedings, you can contact the DRO unit at the Insolvency Service for help.
A. Whilst you’re subject to a Debt Relief Order, you’ll need to comply with certain restrictions. These are:
A. If your Debt Relief Order goes ahead, your bank or building society account won’t necessarily be frozen, although this will probably happen if you have a debt such as loan or credit card with the same provider. Even if you don’t have any debts with the provider, your account could still be at risk so you may like to open a new account elsewhere.
The rules of a DRO allow you to open a new bank or building society account, but you may need to tell the provider that you have a DRO. It’s then their decision whether or not to accept your application and if they do accept it, whether to apply any restrictions or conditions to using your account.
It may be best to choose a basic account with few facilities, to help avoid any problems. However, if you later want to apply for an overdraft, you must tell your bank or building society about your DRO. And you must be careful not to write any cheques that are likely to be returned.
A. The three main credit reference agencies in the UK are Callcredit, Equifax and Experian. These agencies hold credit files, which contain financial information about most adults in the UK. If the Official Receiver accepts your application for a Debt Relief Order, they won’t tell the credit reference agencies about it directly.
Instead, the agencies collect information from a range of public sources. These include:
So, you can expect your DRO to show up on your credit file sooner or later.
A. Firstly, it’s important to remember that if you’re applying for a DRO, your credit rating may well be damaged already. If you’ve been struggling to pay your debts for a while, any missing payments and other incidents such as County Court Judgements (CCJs) will have been reported on your credit file.
Once your Debt Relief Order has been listed on your credit file, the entry will stay there for at least six years from the DRO’s start date. This applies even if your moratorium period ended early and you told the credit reference agencies about this. After the six years have come to an end, the DRO entry should automatically be removed from your credit file. However, if this doesn’t happen, it’s your responsibility to contact the credit reference agencies and ask for your files to be updated.
Even after the six years has passed, you could still find it more difficult and/or expensive to obtain credit in the future, as a result of your DRO.
You can find more information about credit reference agencies and your credit rating here.
A. The Official Receiver (OR) will look carefully into your financial affairs both before and during your Debt Relief Order. During their investigations, they may apply to the court for a Debt Relief Restrictions Order (DRRO) if they think you’ve acted dishonestly at any stage of your DRO, or that you’re in any other way to blame for the situation you’re in.
If the court makes a DRRO against you, this will last between two and 15 years. The restrictions will be the same as those imposed by the DRO itself (see above).
A Debt Relief Restrictions Undertaking (DRRU) is the same as a DRRO, but doesn’t involve going to court.
A. A Debt Relief Order can only deal with the debts that you owed at the time it was set up; in other words, the information included on your initial application form and provided to the Official Receiver during the application process. Once your DRO is in place, you should try to manage your finances more carefully and avoid incurring any more debt.
If you do get any more credit that doesn’t comply with the DRO’s restrictions (see above), the Official Receiver (OR) may terminate your DRO. This could lead to a bankruptcy order being made against you. You could also be prosecuted in court if you didn’t tell the lenders in question that you were subject to a DRO before getting into debt with them.