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What is a Debt Relief Restrictions Order?

While Debt Relief Orders sound very simple and easy, in reality they are a little more complex and bound by a few quite serious rules and restrictions about what you can and cannot do. It’s as much to protect you from creditors and as it is to ensure the system cannot be abused.

When you apply for a Debt Relief Order, you are agreeing to certain things happening during the 12 month period of the order so you comply with the law, namely:

• You will be protected from those creditors that are listed on your Debt Relief Order.

• You will continue to make payments on those debts that cannot be included in the Debt Relief Order

• Unless you agree otherwise with your lenders your debts will be written off at the end of the 12 month term of the Debt Relief Order.

• If your financial circumstances pick up, you can request a three month extension to negotiate payment terms with your creditors.

• You must provide information to the Official Receiver and cooperate with them in every way.

Failing to keep to these agreements and/or undertaking actions that might considered contrary to your agreement could result in the Official Receiver applying to the courts for a debt relief restrictions order and could result in your original Debt Relief Order being revoked and even possible prosecution:

• No proper records of the sale of a property or business in the two years prior to the application of the Debt Relief Order or granting of the restriction order.
• Failing to produce records when required by the Official Receiver.
• Selling an asset for less than it was worth in the two years prior to the application of the Debt Relief Order or granting of the restriction order.
• Giving a preference to a creditor over all the others in the two years prior to the application of the Debt Relief Order or granting of the restriction order. This could be, for example, to ensure a friend is paid off at the expense of anyone else.
• Making unusually large pension contributions
• Not supplying goods or services that have been wholly or partly paid for
• Continuing to trade when you knew you were insolvent and unable to pay your debts.
• Taking on debt which you knew you would not be able to pay and knowing you would be applying for a Debt Relief Order
• Continuing with previous poor financial behaviour after the Debt Relief Order has been granted, such as gambling, extravagant spending and hazardous speculative trading.
• Materially contributing to your debt and lack of ability to pay those debts through neglect of business affairs.
• Fraud or a breach of trust that is fraudulent
• Not cooperating with the official receiver
• Obtaining credit for more than £500 without telling the lender you have a Debt Relief Order
• Promoting, managing or setting up a limited company without court permission.
• Acting as a company director without court permission.

While some of these may worry you at first glance, if you are genuine in your application for a Debt Relief Order you do not need to be worried. Only those individuals who deliberately set out to mislead the Official Receiver and evade paying back their debt by pretending to be financially worse off than they really are will be seriously investigated.

If you are on a low income, have less than £50 a month surplus income after household expenses have been paid and have few assets according to the legal criteria, you have nothing to fear and a Debt Relief Order will give you the breathing space you desperately need to help you get your life back on track.

For more information about Debt Relief Orders and whether they would be right for you, call one of our debt advisers now on 0800 043 2027 for a confidential chat.

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