According to recent figures there has been a large increase in the number of young adults being declared insolvent due to the combined effects of price increases across the board. Hence the substantial increase in the number of debt relief orders (DRO).
Indeed, over 44,000 debt relief orders have been made in England and Wales since they were introduced in 2009.
Said Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisers, Irwin Insolvency, “A debt relief order is used rather than bankruptcy for those with debts of less than £15,000. In order to qualify for a DRO you must not own your own home and have less than £300 in assets and savings. It is a formal process but is cheaper than going bankrupt and does not involve the courts. However, a DRO should not be considered an easy way out of debt. Anyone with a DRO has to declare them when applying for a loan for six years and they also affect people’s credit rating and, therefore, their ability to borrow.”
During the Debt Relief Order period, you will be protected from any enforcement action by creditors who are included in the application. This will typically last for twelve months, however a creditor can apply to the court to extend either the Debt Relief Order or the restrictions placed on a debtor.
Throughout the Debt Relief Order, you will be expected to co-operate with the Official Receiver and should your financial situation improve, you will be expected to repay your creditors.