Debt Relief Orders
Getting a debt relief order means you can potentially avoid bankruptcy and the stigma and hardship that comes with it.
However, debt relief orders are not without their consequences. The Insolvency Service recommends that you always seek independent advice, such as legal advice from a solicitor, before deciding to apply for a debt relief order.
Our debt advice specialists will make sure you fully understand the benefits and drawbacks of this method of dealing with your debts, so you can make an informed decision about how to proceed.
We have built a strong reputation for our leading expertise and experience in this area, as well as our warm, supportive approach to helping clients. We know that this experience is likely to be very stressful for you, but we want to make things easier so you can look forward to a brighter future.
Why choose our market-leading insolvency solicitors for advice about debt relief orders?
Independently recognised expertise
Our individual insolvency lawyers are highly regarded as experts in their fields with consistent recommendations in prestigious client guides, Chambers & Partners and the Legal 500.
Wide-ranging insolvency expertise
We have worked with individuals across all manner of professions and from all walks of life. Our years of experience give us a wide range of expertise and the ability to help you, no matter how complex your case.
All your options explained in simple terms
We know that facing debt head-on is daunting. It is easy to ignore the problem until you feel so deep in the hole that it is impossible to get out. We are here to provide guidance, even when it feels like you have few options open to you.
We will set out your available options in plain, simple-to-understand English and provide our advice about the consequences of proceeding with each option. You will be enabled to make clear, informed decisions about how you want to move forward.
What is a debt relief order?
A debt relief order is like a court order which individuals can get to help them deal with debt that they cannot afford to repay.
If you get a debt relief order, you will not have to make any payments towards certain types of debts included under the order. Your creditors (the people and businesses you owe money to) cannot take enforcement action against you.
Applications for debt relief orders are dealt with by the official receiver – the government official who oversees debt-related proceedings. It is important to cooperate with the official receiver during the debt relief order process.
After the debt relief order ends, most of your debts are written off.
Is a debt relief order right for you?
A debt relief order may be right for you if you:
- Owe no more than £30,000 to your creditors
- Do not own your own home
- Do not have any other assets or savings of value (assets no more than £2,000, excluding basic household items and items you need for work)
- Do not have much spare income (no more than £75 left over each month)
- Have not had a debt relief order in the past six years
There is a long list of criteria to fulfil to be eligible for a debt relief order. The rules may also affect you slightly differently depending on your personal circumstances. For example, cars may be counted as an asset if they are worth over £2,000, but not if they have been adapted because you have a disability.
You cannot get a debt relief order if you have sold or given away assets in the past few years or prioritised paying off certain debts over others.
We can provide detailed advice about whether you are able to get a debt relief order. We will also set out all your other potential options because, just because you may be able to get a debt relief order, does not necessarily mean it is the best option available to you.
How long do debt relief orders last?
The debt relief order places a ‘moratorium’ period on the debts set out in the order. This means that creditors cannot take steps to recover the debts during the moratorium.
The moratorium usually lasts 12 months from the date of the debt relief order. Once the moratorium is over, the debts under the order will be written off.
Can you make payments to creditors during the debt relief order moratorium period?
You cannot make payments in relation to debts listed in the debt relief order. If a creditor listed in the order requests payment, you need to tell them that you are subject to a debt relief order.
What debts are not covered by debt relief orders?
Certain debts cannot be included in a debt relief order, including:
- Court fines or child maintenance obligations
- Student loans
- Damages for negligence, nuisance, breach of statutory/contractual or other duty in relation to the death or personal injury of another person
- Secured debts, such as mortgages (although you will usually be ineligible for a debt relief order if you own your own home)
It is important to seek advice about which of your debts can and cannot be included in a debt relief order before proceeding.
What are the consequences of a debt relief order?
When a debt relief order is in place, you will be subject to various restrictions. For example, you cannot:
- Borrow more than £500 without telling the lender about the debt relief order
- Act as a director of a company
- Create, manage or promote a company without the court’s permission
- Manage a business with a different name without telling your business associates about the debt relief order
- Apply for an overdraft without telling the bank or building society about the debt relief order
- Write cheques that will probably bounce
Breaching these restrictions can be a criminal offence. The official receiver may also extend the restrictions by 2 to 15 years.
We can provide tailored advice about how a debt relief order will likely affect you and whether you have any other viable options.
Do debt relief orders affect your credit rating?
A debt relief order will stay on your credit reference file for six years from the date of the order, even after the moratorium period has ended. This could affect your ability to obtain credit in the future. If you need to move home while the debt relief order is on your credit file, you may find it harder because many landlords and letting agencies will run a credit check when you apply for a tenancy.
After six years, credit reference agencies will automatically remove the debt relief order entry.
Contact our debt relief order solicitors
For clear, practical advice about dealing with debt, including whether a debt relief order may be right for you, please speak to our expert team today.