Debt Relief Order
Chapter 4 of the Tribunals Courts and Enforcement Act 2007 introduces Debt Relief Orders as a new form of bankruptcy in the United Kingdom. A DRO will be a simplified, quicker and cheaper alternative to bankruptcy, suitable for debtors who have few or no assets (less than £300 and not homeowners) and little disposable income (less than £50 per month). It will be possible to apply for a DRO without attending court and the fee is to be £90. The fee may be paid by instalments prior to applying for the Debt Relief Order.
A Debt Relief Order is a form of insolvency, like bankruptcy, and will be subject to a public listing through the Insolvency Service website.
Debt Relief Orders can only be completed by an Approved Intermediary. The Approved Intermediary can review the persons information, make a determination that they are eligible and appropriate for a Debt Relief Order (DRO) and file the DRO application online. Approved Intermediaries will not charge a fee for completing or submitting an application.
Upon receipt of the application and payment of the fee, an Official Receiver may make the Debt Relief Order, administratively, without the involvement of the court if it appears that the applicant meets the requirements.
If the Official Receiver becomes aware of information which means the debtor does not qualify for a DRO, the application will be refused. If this information comes to light after the DRO is made, the Official Receiver may revoke the DRO without reference to the Court. The effect of revoking a DRO will be to leave the debtor open to actions by his or her creditors. If a DRO is revoked the debtor cannot apply for another one within six years.
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