Debt relief orders

 

A Debt Relief Order is an alternative to the bankruptcy process, brought in by the Tribunals Courts and Enforcements Act 2007.

Debt Relief Orders have been available since April 2009, offering debtors an easier and cheaper way to manage severe debt issues. Although bankruptcy remains the only possibility for many debtors, Debt Relief Orders have proven a useful alternative in some cases.

To whom are Debt Relief Orders available?

Debt Relief Orders are available to anyone who:

  • Owes less than £15,000 in total
  • Who does not own their home

If you believe you satisfy these criteria then you can apply for a Debt Relief Order by contacting your solicitor. They can check that this is the most suitable mechanism for obtaining debt relief given your personal circumstances.

If you owe more than £15,000 or are a homeowner, then you cannot apply for a Debt Relief Order, and should consider bankruptcy or an Individual Voluntary Arrangement.

Bankruptcy petitions and Debt Relief Orders

Unlike bankruptcy petitions, Debt Relief Orders do not require a court. Despite this, you should still take legal advice from a solicitor prior to making any application for a Debt Relief Order.

Debt Relief Orders are significantly cheaper than bankruptcy petitions. A bankruptcy petition can cost more than £600 in court fees alone, whilst a Debt Relief Order is available for under £100.

More restrictions to Debt Relief Orders

Further restrictions preventing an application for a Debt Relief Order include where assets exceed £300 in value, or where total disposable income is greater than £50 per month. Debts which do not qualify include court fines, student loans and child maintenance payments.

You must also:

  • Have lived in England or Wales for the past three years
  • Not have been the subject of a bankruptcy, Debt Relief Order or Individual Voluntary Arrangement within the past six years

The main purpose of Debt Relief Orders is to remove the pressure of creditors from your back. A Debt Relief Order typically lasts 12 months, after which time any outstanding debts are written off. In this respect Debt Relief Orders are similar to bankruptcy.

If you are in financial difficulty you should contact a debt solicitor for advice.

Do you need a solicitor to help you apply for a Debt Relief Order? Contact Law can put you in touch with a specialist debt solicitor, to help you organise your finances. Please call us on 0800 1777 162 or complete the web-form above.

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