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Government has announced a major change in policy for pensions in Debt Relief Orders (DROs) which will come into effect on the 6th April 2011.
Read more Major change announced in pension reforms for DROs and Mike's blog Government gives date for radical change in Debt Relief Orders DROs
The Debt Relief Order is a form of insolvency for people that have a certain amount of debt, little disposable income and few assets.
The debt relief order will help to place the least complicated debt discharge cases on a fast-track through the court system with no personal appearance at court required.
Debt Relief Orders (DROs) became available on the 6th April 2009.
Mike has been interviewed several times about Debt Relief Order on BBC News 24, you can watch and see why he feels the government should do more to help overstretched consumers.
Watch BBC News Channel 2 May 2009
Watch BBC News Channel 7 August 2009
People with relatively low liabilities, little surplus income and few assets and who are currently unable to access other forms of debt relief can apply. Those living with parents or in rented accommodation may also apply. Those that have a mortgage and are in negative equity will not be able to apply. So if you are a house owner you are not eligible.
You will have to pay £90, however if you cannot raise the full amount when you apply for the DRO and you are on Job Seekers Allowance, then you will be offered six months to pay the £90 fee.
By seeking financial advice from a debt advisor and if a DRO appears to be appropriate, an approved intermediary, like the Citizens Advice Bureau, CAB, will be able to help you complete an application. The intermediary may be the same person from whom advice was originally sought, or may be a further advisor that you are referred to once it is considered that a DRO is appropriate.
It is being proposed that your car, up to the value of £1,000, will be allowed and will not be taken into account as an asset. If you have a disability motor then this allowance will increase.
Yes until the April 6th 2011, after that date then most approved pensions will no longer count against the debtor/borrower.
See article Major change announced in pension reforms for DROs and Mike's blog Government gives date for radical change change in Debt Relief Orders DROs
DROs are applied for online, with an approved intermediary helping to complete an application.
Upon receipt of the application and payment of the fee, an Official Receiver is able to make the order, administratively, without the involvement of the court if it appears that the applicant meets the requirements.
The Official Receiver is able to refuse to make an Order or can choose to delay the decision pending further information from the applicant.
During the period that an order is in force, the debtor will:
As with other forms of personal insolvency, a DRO debtor's credit rating will be affected and there will be civil and criminal penalties for those who abuse the system.
The Official Receiver is able to investigate, either on his own account or as the result of an objection from creditors, and is able to revoke the order if the debtor is found to have failed to provide a full and accurate account of their financial affairs (for example, an understatement in their assets or income). Failure to provide such an account may result in civil and criminal sanctions.
For the duration of the Order, the debtor will be subject to similar restrictions as in bankruptcy, and their details will be on the Individual Insolvency Register.
Furthermore the Official Receiver will be able to apply for a Debt Relief Restrictions Order, similar to the bankruptcy restriction order, which will extend the period of restriction for up to fifteen years for debtors who are dishonest or culpable.
Provide that information to the Official Receiver who will consider every valid objection and is able to revoke a DRO if appropriate.
DROs are aimed at people with no assets and a low income with no other access to debt relief and no prospect of the situation improving. If people do have assets or there is a possibility of an improvement in financial circumstances, a DRO is not an appropriate solution and other debt remedies are available.
Whilst the official receiver will not automatically investigate cases, he or she is able to do so. Investigations may lead for example to a revocation of the order or an application to court for a restrictions order, the effect of which is to extend the restrictions placed upon a person under a DRO for a period up to 15 years.
A trained debt advisor who has been approved to act as an intermediary by a 'competent authority.' This will be the Citizens Advice Bureau. CAB
It is anticipated that the intermediary will have completed basic checks on the information provided by the debtor, such as considering paperwork and evidence of income, liabilities. If it is considered that a DRO is suitable in the circumstances detailed by a debtor, the intermediary will help to complete the online application upon the debtor's request.
How can I become an intermediary?
By application to a competent authority. It is expected that intermediaries will already be trained money advisers. A list of the competent authorities will be made available on the Insolvency Service website.
A body designated by the Secretary of State as being able to authorise intermediaries. It will be a matter for the competent authority to determine the suitability of each intermediary that they authorise and to ensure those intermediaries have, for example, appropriate training, experience, complaints procedures, equal opportunities procedures.
http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/DebtRelief.htm
Source www.insolvency.gov.uk
Mike has been interviewed several times on BBC News Channel on Debt Relief Orders, you can watch and see why he feels the government should do more to help overstretched consumers.
Watch BBC News Channel 2 May 2009
Watch BBC News Channel 7 August 2009
For no nonsense advice just submit the short form and Mike or one of his team will get back to you.
my second wave #ff @DAVIDJONES_dpaj @martynsaville @Zerocredit_UK @moneyaware @NoMoreExcuses_ @rabbitbumslim and a special @Alan_Wil5on
My #ff for their input this week on debt issues @Gemma_Payplan @steveperry2011 @NEDerbyshireCAB @ConfusedTalia @hilaryosborne @thinkdebtfree
Mike Thomas aka the 'DebtWizard' helps individuals overcome their debt problems.
Mike writes all the articles found on this site.
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