Debt Relief Orders
Since 1st October 2015, people with debts under £20,000, who have assets under £1,000 other than excluded assets such as tools of the trade, ordinary household furniture and a car worth under £1,000 and whose spare income, after their living expenses, is less than £50 per month, can register with the Official Receiver for a Debt Relief Order.
Since 6th April 2011 Pensions are exempt from DROs in the same way as they are from Bankruptcy. Previously they had not been, due to a mistake in the drafting of the legislation, but this has now been corrected.
There will be no need for any Court hearing but the application will need to be made through an approved intermediary, such as a Citizens Advice Bureau. The cost of applying for a DRO is £90.
At the end of twelve months the Order will expire and so will all debts.
There will be the same exclusions for creditors as with Bankruptcy e.g. Student Loans, fines, etc. and the same penalties will apply as with Bankruptcy for concealing assets or liabilities and other offences.
If your debts are under £5,000 you can apply for an Administration Order in the County Court and they will schedule the debts and fix a regular amount for you to pay into Court, whilst at the same time giving you protection from the creditors.
Different County Courts have different ways of dealing with these Orders and it has become a bit of a lottery. For that reason the government decided in 2009 that it would standardise the rules and increase the limit to £15,000 but unfortunately, having created the legal framework to do so, cancelled those plans at the last minute. They say that they now have no plans to change the existing system.