Debt Relief Orders
What is a Debt Relief Order and how does it differ from a Bankruptcy Order?
On April 6th 2009 Debt Relief Orders came into effect in England and Wales and are similar to delcaring yourself bankrupt.
So what is the difference between a Debt Relief Order and Bankruptcy?
The main difference between a Debt Relief Order and declaring yourself Bankrupt is the costs involved. In order to delcare yourself bankrupt you will need to pay a fee of £450 which many people on low incomes are unable to afford. But a Debt Relief Order only costs £90 and be paid for in installments before actually applying for it. Another feature which people may find attractive is that you do not have to attand court to apply for it.
As you may expect, Debt Relief Orders do have certain conditions which you must meet in order to apply for one. These include, but not limited to:
- You must be unable to pay your debts in the first place
- You total gross assets must not be worth more than £300 and as the assets also include the value of your home, if you are a home owner then it is doubtful that you will be able to apply for a Debt Relief Order (unless you live in a garden shed)
- Your total unsecured debts must be less than £15,000
- You must be a resident of England or Wales in the last 3 years
- Your disposable income, after normal household expenses, must not be more than £50 per month
- You must not have been subject to a Debt Relief Order within th elast six years and you must not currently be invloved in any form of bankruptcy order or Individual Voluntary Arangment.
How To Appy For a Debt Relief Order
You must realise that a Debt Relief Order is actually a form of insolvency, similar to bankruptcy which means it is also subject to being publicly listed on the Insolvency Service website which means it will become public knowledge and freely available to anyone searching that website.
The only way to apply for a DRO is to use the services of organisations such as the Citizens Advice Bureau. The information you supply can be reviewed by such organisations to determine if you are actually eligable for a (DRO) Debt Relief Order. The DRO can also be filed online and as such will avoid the need for you to attend a court hearing.
All Debt Reilef Orders are sent to an Official Receiver and it is they who administer the application. If they see that your DRO application meets all of the requirements then they will accept your application without any involment of a court. But please be warned, if the Official Receiver finds out at a later date that the information you supplied is inaccurate, which meant that you would not have been eligable for the DRO in the first instance, then they may revoke the Debt Relief Order and you will not be able to apply for another for a period of six years.
More information about Debt Relief Orders can be found on our Debt Relief Order page
Don’t forget to check out our Payday Loans section
{ 2 comments… read them below or add one }
my name Trish and I’m on job seekers allowance which is a very low income and I lost my job last year so it left me with a lot of debts and I can’t pay them as I’m not working any more. Its hard to feed my self and paye my bills so could I apply for the DRO debt relief order. thank you Trisha
Hi Trisha – thank you for your question. The details of how to check if you qualify for a DRO are listed above on this page. Your next step would be to contact your local Citizens Advice Center and make an appointment with them as they will need to fill in the forms for you. You can find your local center at http://www.citizensadvice.org.uk/index/getadvice.htm
Regards,
Michael