What are the restrictions of a debt relief order?


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. 
Debt Relief Orders are available to anyone who owes less than £15,000 in total and who does not own their home. 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.
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 over £600 to make in court fees alone, whilst a Debt Relief Order is available for under £100. 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.
You must also have lived in England or Wales for the past three years, and must 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 solicitor or insolvency practitioner for advice. 
If you would like to obtain legal advice on the restrictions of a debt relief order, Caven can put you in touch with a local specialist solicitor free of charge. So, if you have any questions or would like our help in finding local solicitors please call us on 08001 221 2299 or complete the web-form above.
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