I have heard about Debt Relief Orders or DROs, what are these?
What is a Debt Relief Order (DRO)? A DRO can be a way to deal with your debts if you find yourself in financial difficulty and unable to manage. They can be one alternative to going bankrupt if you have debt of less than £15,000, few assets and little spare income. Most unsecured debts can be included in an application for a debt relief order. These are called qualifying debts and include debts such as credit cards, overdrafts, doorstep loans, council tax arrears, benefit overpayment and social fund loans.
How does a DRO work?
A DRO lasts for 12 months. During that time creditors included in the DRO cannot take any action to recover their money. At the end of the 12 months, if your circumstances have not changed you will be free from the debts that were included in the DRO. If your financial situation has improved the DRO can be cancelled. DRO's are administered by the Insolvency Service. They work in partnership with authorised skilled debt advisers called Approved Intermediaries. An Approved Intermediary will help with your DRO application to the Insolvency Service.
How do I apply for a DRO?To apply for a DRO, you must meet certain conditions:-
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You must owe less than £15,000.
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You must not be able to pay your debts.
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You must have few assets. You can own a car to the value of £1000 but the total value of other assets must not be more than £300. As assets include a house or a flat this means that owner occupiers cannot usually apply.
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Your disposable income (after taking away tax, national insurance contributions and normal household expenses) must be no more than £50 a month.
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You live or run a business in England or Wales – or have done so in the last three years
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You must not have applied for another DRO within the last 6 years.
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You must not be involved in another formal insolvency procedure (like bankruptcy) at the time you apply.
To apply for a DRO you must use an Approved Intermediary to send an application form to the Official Receiver. The Approved Intermediary will ensure you meet the qualifying criteria for an order, help you complete the application form and send your application form to the Official Receiver. You must pay a £90 fee to the Official Receiver who will then asses your DRO application and may ask for further information. Approved Intermediaries should not charge you for assisting with a DRO application.
More information on DRO's is available from the Insolvency Service website -
www.insolvency.gov.uk/bankruptcy/alternativestobankruptcy.htm The following organisation in Blackpool have Approved Intermediaries for DRO's:
Advice Link
Atkinson Cave & Stuart solicitors
Blackpool CAB
Barker Booth & Eastwood solicitors
Housing Advice (Blackpool Council)