The information we provide differs between countries. To get information for your country, please select from the dropdown.
Debt relief orders
This information applies to Northern Ireland
What is a debt relief order
A debt relief order is an order you can apply for if you can't afford to pay off your debts. It's granted by the Insolvency Service and is a cheaper option than going bankrupt.
You must have debts of less than £15,000 and a low income.
A debt relief order usually lasts for a year and during that time, none of the people you owe money to (your creditors ) will be able to take action against you to get their money back. At the end of the year, you'll be free of all the debts listed in the order.
You can't apply for a debt relief order if you:
- own things of value or have savings of over £300
- own a vehicle worth more than £1,000.
To apply for a DRO, you'll need to contact an authorised adviser who checks whether you meet the conditions and then applies for the order on your behalf. The order will cost you £90, which you must pay in a single cash payment.
You may have other options for dealing with your debts besides applying for a debt relief order. For more information about these options, see Help with debt.
On the following pages, we will explain in more detail:
- what a debt relief order is
- who can apply for a debt relief order, including the conditions you need to meet
- who can't apply for a debt relief order
- what type of debts can be included in a debt relief order and which can't
- how to apply for a debt relief order
- what happens during a debt relief order, including what to do about your creditors
- things you should do during a debt relief order and things you won't be able to do
- what happens after a debt relief order finishes, including what happens to your debts.
Who can apply for a debt relief order
You can only apply for a debt relief order if you meet certain conditions. These are when:
- you have qualifying debts of £15,000 or less. These debts must be of a certain type
- you have spare available income of £50 or less a month after paying your normal household expenses
- the things you own (your assets) and any savings are worth £300 or less. However, if you have a motor vehicle, this must be worth £1,000 or less unless it has been specially adapted because you have a physical disability
- in the last 3 years you must have lived, had a property or carried on a business in Northern Ireland.
What type of debts can be included in a debt relief order
Only certain types of debt can be included in a debt relief order. These are called qualifying debts and are debts such as:
- credit cards, overdrafts, loans
- rent, utilities, telephone, council tax
- benefit overpayments and social fund loans
- hire purchase or conditional sale agreements
- buy now - pay later agreements.
If you have rent arrears your landlord may still be able to gain possession of the rented property following the making of a DRO. The Northern Ireland Insolvency Service has agreed that where you have rent arrears and need to make payments to your landlord in order to prevent possession, then you will be able to continue with these payments after the DRO is made, so long as there is either a court order or a written agreement with the landlord for payment of arrears.
If you have a hire purchase or conditional agreement you may have to return the goods bought with these loans, unless someone else can pay the instalments. You will not be able to carry on paying for the goods once you have a debt relief order.
For more information about different types of loans, including hire purchase and conditional sale agreements, see Credit.
For more information about social fund loans, see Help for people on a low income – the Social Fund.
Certain types of debt can't be included in a debt relief order. You must pay these separately. People you owe these debts to can still take action against you, even if you have a debt relief order. These debts include:
- excluded debts
- magistrates court fines
- child support and maintenance
- student loans
- damages for personal injury
- obligations under a criminal confiscation order.
You will still be liable for secured debts after the end of the debt relief order. You must include details of any secured debts in the DRO application and they will count towards the £15,000 debt limit.
For more information on debts you will remain liable for, see the Insolvency Service booklet Guide to Debt Relief Orders. It can be downloaded from their website www.detini.gov.uk.
Spare available income
When you work out how much spare available income you've got, you must count all the money you've got coming into your household. This could include:
- your salary or wages, after deduction of tax and national insurance
- welfare benefits, such as Jobseeker's Allowance and Employment and Support Allowance
- your pension
- contributions from other household members
- any rental income.
You will be able to deduct a reasonable amount for your everyday needs. If the figure left over each month is less than £50 then you may be able to apply for a debt relief order if you meet the other conditions.
For more information about how to work out your spare available income, see How to work out your budget.
Assets
Assets are the things of value that you own.
If your assets are worth more than £300, or if you have a motor vehicle worth more than £1,000, you won't be able to apply for a debt relief order.
Examples of assets include savings, vehicles, shares, antiques and property. This means that if you own a property, it's very unlikely that you will be able to apply for a debt relief order, even if you are in negative equity. It makes no difference whether you own the property outright or you have a mortgage on it.
If you are receiving pension payments from a private or occupational pension fund, the value of the fund will not count as an asset for a DRO, but the payments will count as income.
If you have not retired and have funds in an HMRC approved pension scheme, they do not count as an asset for a DRO, but the value of the funds in other types of private or occupational pensions will count as an asset. You’ll need to check with an adviser if you want to apply for a DRO.
When you work out the value of your assets, there are some items you don't need to take into account. These include:
- household equipment such as bedding, clothing and furniture
- tools, books and other items of equipment you use in your job or business
- a car which has been specially adapted because you have a physical disability and which you need to carry out your everyday activities
- a motor vehicle worth less than £1,000.
Who can't get a debt relief order
You won't be able to get a debt relief order if:
- you're currently bankrupt
- you have an Individual Voluntary Arrangement (IVA) or are applying for an IVA
- your creditors have applied to make you bankrupt but the hearing hasn't yet taken place. But you might still be able to apply for a debt relief order if your creditors agree
- you have been given a Bankruptcy Restrictions Order or Undertaking
- you have petitioned for bankruptcy but your petition has not yet been dealt with. However, this doesn’t apply if you’ve petitioned for bankruptcy and the judge has referred you for a debt relief order instead
- you have had a debt relief order in the last 6 years
- you have been given a Debt Relief Restriction Order or Undertaking.
For more information about Individual Voluntary Arrangements and Bankruptcy Restrictions Orders, see Help with debt.
How to apply for a debt relief order
Debt relief orders are administered by the Official Receiver through the Insolvency Service.
You can only apply for a debt relief order online through an approved third party, or intermediary. An intermediary must be a skilled debt adviser approved by a competent authority who has been given permission to complete the forms and give advice on debt relief orders.
You can find intermediaries at your local Citizens Advice Bureau. To search for details of your nearest CAB, click on nearest CAB. You can also find intermediaries by contacting the Northern Ireland Insolvency Service on 02890 548531
You will have to pay a fee of £90 to apply for a debt relief order. You must pay it in the form of a single payment in cash before the Official Receiver will consider your application. Once paid, the fee is non-refundable, whether the Official Receiver approves or rejects your application. So it is very important to make sure that what you put on the application form is true, correct and complete before the form is sent in.
Your approved intermediary will provide you with a unique bar-coded letter, which you can present at a number of outlets in order to pay your fee. The Insolvency Service recommends that you make the payment on the same day as the application to ensure the Service receives the payment within the 20 day time limit for receipt of fees. You can make payments at the Post Office or at Pay Point.
If a charity has agreed to pay your DRO fee, they should make the payment in cash through an approved agent.
The current fee of £90 may change. You can check the current fee for a DRO by consulting your intermediary, or at www.detini.gov.uk.
Once the application is received and you have paid the fee, the Official Receiver can make the order as long as you meet all the conditions. It is an offence to give false or misleading information in your application.
Once your debt relief order has been approved you should not pay any of the creditors listed on the order. Your creditors will be told about the debt relief order and you will be protected from them taking any action.
Your debt relief order will be published on the Insolvency Service Register at: www.detini.gov.uk. The register is available to the public. Your name and address will remain on the register for 15 months.
Things you must not do before you apply for a debt relief order or during the debt relief order
There are certain things you must not do before you apply for a debt relief order or during the debt relief order. These include:
- hiding, destroying or faking any books or documents up to one year before you apply for a debt relief order and during the debt relief order period
- not telling the Official Receiver of any change in your circumstances that would affect your application between making the application and the order being granted
- giving away or selling things of value for less than they're worth to help you qualify for getting a debt relief order.
If you are found guilty of doing any of these things, you will be committing an offence. This could lead to the Official Receiver refusing to grant you an order. In more serious cases, you could even be prosecuted and fined, sent to prison or both.
If you have already been granted a debt relief order, the Official Receiver might apply for a Debt Relief Restriction Order, or your debt relief order might be taken away.
You will not be found guilty of an offence if you can show that you didn't intend to defraud anyone or hide information.
If you want to apply for a debt relief order you can contact your nearest Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
For more on DROs, call the Insolvency Service Enquiry Line on 028 9054 8531. You can email the Insolvency Service at insolvency@detini.gov.uk, available Mon to Fri 9am - 5pm, or see the Insolvency Service website www.detini.gov.uk.
What happens during the debt relief order period
During the period of your debt relief order, you won't need to make any payments towards the debts listed in the order. The creditors of these debts won't be able to take any action against you. A debt relief order normally lasts twelve months.
However, you will need to continue to pay your normal household expenses which may include rent, council tax, gas, electricity and water charges. You will also need to pay off any debts that are not included in the debt relief order.
You can't add new debts to the debt relief order or debts that you forgot about. You will, however, have to tell the Official Receiver about any new debts which you get during the period of the order.
You must tell the Official Receiver if your circumstances change once you have a debt relief order or if you forgot to include information in the order.
Benefits
If you're on benefits, the Social Security Agency, Northern Ireland Housing Executive or Land and Property Services may be taking money from your payments to repay a benefits overpayment or Social Fund loan.
A recent decision in the Court of Appeal has ruled that the DWP cannot make deductions from benefits to recover any benefit overpayment or social fund loan included in the DRO during the DRO moratorium period, even if fraud was involved. At the end of the moratorium period the debt will be written off, unless it occurred through fraud..
You can get advice from your local Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
For more information about Social Fund loans, see Help for people on a low income – the Social Fund.
Getting credit
Your debt relief order will appear on your credit file. It will remain on your file for six years. This may affect your ability to get credit in the future.
You may find it difficult to open a bank account once you have a debt relief order.
Things you can't do when you've got a debt relief order
While a debt relief order is in place, there are certain things you won't be able to do. These are called restrictions and include:
- getting credit over £500 without telling the lender you have a debt relief order
- carrying on a business in a different name from the one under which you were given a debt relief order, without telling all those you do business with the name under which you were granted a debt relief order.
- being involved with promoting, managing, or setting up a limited company, without permission from court. Also, you can't act as a company director, without getting permission from court.
If the Official Receiver believes that you have provided wrong information or been dishonest they can apply for a Debt Relief Restriction Order.
Debt Relief Restriction Order
If you are given a Debt Relief Restriction Order, this means that the restrictions on the things you can do can last from 2 to 15 years.
However, the debt relief order period will still end after twelve months and you won't have to pay off any of the debts included in the order.
If you don't follow the restrictions, you will be committing an offence. This could lead to imprisonment or a fine.
Changes in your circumstances
You must tell the Official Receiver if there are any changes in your circumstances during the period of the debt relief order. These changes may include:
- anything which you realise is wrong or has been missed out from the information you've given
- any increase in your income
- any additional money or valuables that you acquire, for example, money left in a will.
If you fail to tell the Official Receiver of a change in circumstances like these, you may be committing an offence. This could lead to the debt relief order being taken away from you. This would mean you will have to make arrangements to pay your creditors.
What happens after the debt relief order finishes
All of the debts that are listed on your order will be written off and you will no longer have to pay them.
You will have to pay any debts not included in the debt relief order which are still unpaid.
You can only apply for a debt relief order once every six years.
