Debt Relief Order Explained

	Do you live in Scotland? As Scotland has its own legal system, distinct from that of England and Wales, laws relating to bankruptcy are different too. In Scotland, personal bankruptcy is known as sequestration.

	What is a Debt Relief Order? A Debt Relief Order (DRO) is a new alternative to bankruptcy that can be applied for from the 6th of April 2009 if you meet the DRO criteria. Debt Relief Orders are for those who do not own their own home, have little in the way of assets or surplus income and owe less than £15,000.hey are suitable for people who do not own their own home, have little surplus income and assets and less than £15,000 of debt. A DRO does not involve going to court. Instead they are run by The Insolvency Service in partnership with skilled debt advisers who are called approved intermediaries. A DRO lasts for 12 months and during that period creditors named on the order cannot take any action to recover their money without permission from the court. To qualify for a Debt Relief Order you must owe less than £15,000 and be unable to pay your debts. You can own a car to the value of £1,000, but the total value of other assets must not exceed £300. After taking away tax, national insurance contributions and normal household expenses, your disposable income must be no more than £50 a month. You must be living in England or Wales, or at some time in the last 3 years have been living or carrying on business in England or Wales. You must not have been subject to another DRO within the last 6 years and you must not be involved in another formal insolvency procedure at the time you apply. The Debt Relief Order has been introduced to help those on very low incomes and is expected to be an alternative route for around 10-15% of those who would otherwise seek bankruptcy. One of the main advantages of Debt Relief Orders other than that they do not involve the courts is the cost. A DRO currently costs £90 - much less than personal bankruptcy. The fee must be paid to the Insolvency Agency before your application will be considered. You can only apply for a DRO through a skilled debt adviser called an approved intermediary who is approved to give advice on DROs by one of the competent authorities. The intermediary will decide whether a DRO is the best form of debt relief for you and your circumstances.

What is a Debt Relief Order?

A Debt Relief Order (DRO) is a new alternative to bankruptcy that can be applied for from the 6th of April 2009 if you meet the DRO criteria.

Debt Relief Orders are for those who do not own their own home, have little in the way of assets or surplus income and owe less than £15,000.hey are suitable for people who do not own their own home, have little surplus income and assets and less than £15,000 of debt.

A DRO does not involve going to court. Instead they are run by The Insolvency Service in partnership with skilled debt advisers who are called approved intermediaries.

A DRO lasts for 12 months and during that period creditors named on the order cannot take any action to recover their money without permission from the court.

To qualify for a Debt Relief Order you must owe less than £15,000 and be unable to pay your debts.

You can own a car to the value of £1,000, but the total value of other assets must not exceed £300.

After taking away tax, national insurance contributions and normal household expenses, your disposable income must be no more than £50 a month.

You must be living in England or Wales, or at some time in the last 3 years have been living or carrying on business in England or Wales.

You must not have been subject to another DRO within the last 6 years and you must not be involved in another formal insolvency procedure at the time you apply.

The Debt Relief Order has been introduced to help those on very low incomes and is expected to be an alternative route for around 10-15% of those who would otherwise seek bankruptcy.

One of the main advantages of Debt Relief Orders other than that they do not involve the courts is the cost. A DRO currently costs £90 - much less than personal bankruptcy. The fee must be paid to the Insolvency Agency before your application will be considered.

You can only apply for a DRO through a skilled debt adviser called an approved intermediary who is approved to give advice on DROs by one of the competent authorities. The intermediary will decide whether a DRO is the best form of debt relief for you and your circumstances.

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