A Debt Relief Order is an order available to residents of England, Wales and Northern Ireland and is granted by the Insolvency Service. It is designed to help debtors who have less than £20,000 of debt, a monthly disposable income of £50 or less, assets worth less than £1,000 and a vehicle worth less than a £1,000, put forward an application to freeze interest and further action from their creditors for a period of 12 months without repayment to the debt.
As with other statutory solutions an affordability assessment will take place by an approved intermediary who will assist the debtor with an application to the Insolvency Service for a DRO. This assessment will account for essential living costs and assets when considering the debtor’s ability to make payment to the debt, if no repayment is available the order may be granted. The Official receiver will also manage the Debt Relief order and liaise with creditors during the order.
A Debt Relief Order will usually last for 12 months, during which time a debtor will be subject to certain restrictions that prevent them from obtaining further credit of any more than £500 without disclosing to the lender they are subject to a DRO and they cannot act as a company Director without the court’s permission. At the end of the order providing there has been no change in the debtor’s circumstances the debts are ordered to be written off and creditors cannot legally pursue the debtor for further repayment.
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