Frequently Asked Questions - Debt Relief Order
The following debts will not be included in your DRO and you will still need to make arrangements to pay these:
- Student loans
- Magistrates courts fines
- child support/maintenance arrears
- personal injury damages
- obligations under a criminal confiscation order.
- Debts incurred through fraud such as benefit overpayments will not be included in the DRO.
Disposable income is the amount you have left over after you have paid essential living costs.
The DRO will stay on your credit file for 6 years and this could affect your ability to obtain credit. During the DRO you will be unable to take out credit of £500 or more without informing the lender that the DRO is in place.
Insolvency means that you are unable to pay your debts when they become due and where you have more debts than assets that could be made available to pay them.
You will no longer be responsible to pay the debts. However, any joint borrowers or guarantors will not be affected by your DRO and the lender can still pursue them for the debt.
A Debt Relief Order is a new form of insolvency which is available in Northern Ireland from 30th June 2011. A DRO is similar to bankruptcy but is cheaper and will help people who have relatively small debts (less than £15,000), little assets (less than £300) and available disposable income (less than £50).
You will be released from the debts included in the DRO including any interest and charges.
No you will not have to go to Court as the DRO application is made to the Insolvency Service who will decide whether to grant the DRO.
Your creditors will be told that the DRO has been made and as a result they cannot take any action in relation to the debt. Your DRO will usually last for 1 year. During this time, you must not make any payments towards the debts included in the DRO. You will be protected from any action by your creditors and in most cases, your debts will be written off once the DRO comes to an end. You must still pay your ongoing essential expenditure such as rent, rates utilities etc.
You cannot apply for a DRO if:
- You are an un-discharged bankrupt
- You are still in an Individual Voluntary Arrangement
- You are subject to a Bankruptcy restriction Order or Undertaking
- You are subject to a Debt Relief Restriction Order or Undertaking
- You have a pending bankruptcy petition
- You have had a DRO in the last 6 years
No the DRO will not be advertised in the paper. However, your name will be put on the Debt Relief Order Register. This DRO Register can be found on the Insolvency Service website and can be viewed by the public. In some circumstances, you will be able to stop your address from appearing in the register and you should seek advice from one of our Debt Action NI Advisers.
Your assets must not be more than £300 in total. Assets include property, savings, stocks and shares, Credit Union shares, caravans, antiques and collectables. The following items will not be counted as assets:
- Tools, books and other equipment that are necessary for use in employment, business or vocation (this does not include a vehicle;
- Clothing, bedding, furniture, household equipment and items that are necessary for the basic domestic needs of you and your family.
- A car which has been specially adapted due to a substantial and long term physical disability
- 1 domestic motor vehicle worth less than £1,000.
To qualify for a DRO you must:
- Have no more than £15,000 of debt
- Have no more than £50 per month available income after living costs have been paid
- Have no more than £300 worth of assets (you are allowed 1 vehicle up to the value of £1,000). If you are a homeowner, you will not be able to apply for a DRO as your house is seen as an asset even if it is in negative equity. If you think you are suitable for a DRO, you should seek advice from one of our Debt Action NI advisers.
No you cannot add a debt at a later date which means if you forget to include a debt, that creditor will still be able to take action against you. You should always get a copy of your credit reference file before sending in your application to ensure that all debts are included. Your intermediary should be able to help you with this. The main credit reference agencies are Equifax, Callcredit and Experian.
You must apply for a DRO through an approved intermediary. An approved intermediary will be a debt adviser. Our Debt Action NI advisers are approved intermediaries who will be able to complete and send the form on your behalf. The application is sent to the Northern Ireland Insolvency Service who will decide whether to grant the Debt Relief Order.
You are allowed only 1 vehicle up to the value of £1,000. Any other vehicles/assets must not total more than £300. Therefore if you have 2 vehicles, it is unlikely that you will be able to apply for a DRO but you should seek advice from one of our Debt Action NI Advisers.
The Insolvency Service must receive the fee within 20 days after the application has been sent. Your application will be automatically rejected if the Insolvency Service does not receive your payment within the 20 days. Be careful as it will take 10 days for your fee to clear. We would strongly suggest that you have the money ready once you have decided to apply for a DRO and pay for it on the same day as submitting your application.
If your situation improves and your income and/or assets go over the limit, the DRO can be cancelled.
The current fee is £90. Please note that this fee is non-refundable and will always be payable. Payment must be made via Post Office or Paypoint terminal.