Debt relief orders (DROs)—checklist


Published by a UUÂãÁÄÖ±²¥ Restructuring & Insolvency expert
Checklists

Debt relief orders (DROs)—checklist


Published by a UUÂãÁÄÖ±²¥ Restructuring & Insolvency expert

Checklists
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Debt relief orders

Debt relief orders (DROs) are an alternative to bankruptcy and are dealt with in sections 251A–251X and Schedule 4ZA to the Insolvency Act 1986 (IA 1986), and supplemented by the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, Pt 9. They provide protection from debts by prohibiting further legal process against the debtor without the court's permission and, after a year, discharges the debtor from those debts.

The big difference between a DRO and bankruptcy is that DROs are available only to debtors with no substantial assets and no income over and above what is necessary for the debtor's 'reasonable needs', and there are no provisions for the collection, realisation and distribution of the debtor's estate on the basis there will be nothing to distribute. As set out in R (on the application of Payne) v Secretary of State for Work and Pensions, DROs are a 'a new and simplified way of wiping the slate clean for debtors who are too poor to go bankrupt.' For further reading on DROs, see Practice Note:

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