Debt Advice Handbook 14th editionChapter 10: Personal insolvency 2. Debt relief orders
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2. Debt relief orders
A debt relief order (DRO) gives the client a 12-month moratorium, during which time the creditors specified on the order cannot force the client to pay those debts.1For an overview, see M Gallagher, ‘Debt Relief Orders’, Adviser 132 Following the moratorium, the client is discharged from all the debts included in the order (other than those incurred fraudulently).
Although it is more than 10 years since the DRO solution was introduced, practice is continually evolving. The DRO Toolkit is an essential resource for both advisers and approved intermediaries and is available on AdviserNet (for Citizens Advice advisers and intermediaries) and on the Institute of Money Advisers (IMA) and Wiseradviser websites (for other advisers and intermediaries). The monthly bulletins and articles published by the Shelter Specialist Debt Advice Service regularly provide information and advice about DROs and IMA members can find these in the Networking and Information section of the IMA website (i-m-a.org.uk). Non-members can sign up for these at debtquality.org.uk and this includes archived issues. In 2019, the Insolvency Service published the first version of the DRO A–Z Guidance, which sets out technical matters. From 29 June 2021, this has been replaced by Debt Relief Orders: Guidance for debt advisers, which is published in the Debt Adviser Tools and Information section of the Insolvency Service website and is available online at gov.uk/guidance/debt-relief-orders-guidance-for-debt-advisers. This now includes the date the current version was last updated together with a summary of the topics updated which can be accessed by clicking on ‘See all updates’. The Insolvency Service also published Intermediary Guidance Notes which contained information about the roles of the Insolvency Service and approved intermediaries as well as guidance on completing the DRO application form. The Insolvency Service has finally published the updated Intermediary Guidance Notes on the GOV.UK website. It now comprises two documents: DRO Guidance for Approved Intermediaries and How to complete and submit the DRO application. These are both available at gov.uk/guidance/debt-advisor-tools-and-information.2See also Considering some of the challenges for an Approved Intermediary in the Enquiry of the month section of the SDAS e-bulletin, July 2020
 
1     For an overview, see M Gallagher, ‘Debt Relief Orders’, Adviser 132 »
2     See also Considering some of the challenges for an Approved Intermediary in the Enquiry of the month section of the SDAS e-bulletin, July 2020 »
Debt relief orders and bankruptcy
DROs have a lot in common with bankruptcy, but there are significant differences.
    •The cost to the client of applying for a DRO is considerably less than the cost of applying for a bankruptcy order.
    •The client can apply for a bankruptcy order on her/his own, but needs the assistance of an intermediary in order to apply for a DRO.
    •Creditors can object to a DRO being made, but cannot object to a bankruptcy order being made on a debtor’s bankruptcy application.
    •There is no maximum debt level for a bankruptcy order and no preconditions on income or assets.
    •If the client has entered into a transaction at an undervalue or given a preference within the prescribed period, this may be set aside by the trustee in bankruptcy, but could prevent the client from obtaining a DRO. On the other hand, there is no provision for the official receiver to set aside such a transaction if a DRO has been made.
    •There is no provision for revoking a bankruptcy order on the grounds that the client’s financial circumstances have improved prior to discharge.
    •Assets do not vest in the official receiver, and so a DRO does not involve any realisation of assets or require clients to make any payments to their creditors.
    •Contingent liabilities cannot be included in a DRO.
    •A DRO only releases the client from the debts included in the application. Bankruptcy releases the client from her/his ’bankruptcy debts’ (see here), whether or not they are listed in the statement of affairs.
Who can apply for a debt relief order
A client who is unable to pay her/his debts and who meets the eligibility conditions (see here) can apply for an order in respect of her/his ‘qualifying debts’.
Qualifying debts
Any secured debt is not a qualifying debt. Otherwise, any debt for an identifiable sum which is not excluded qualifies for a DRO. ‘Excluded debts’ are:
    •fines (including compensation, but not the criminal courts charge; the Insolvency Service DRO Team has now accepted that costs orders made against the client by the court and treated as payable under a conviction fall within the definition of ‘fine’ and are, therefore, not qualifying but excluded debts) and confiscation orders. This does not include costs of enforcement – eg, enforcement agents’ (bailiffs’) charges;
    •child support assessments and maintenance orders;
    •student loans;
    •damages for personal injury or death arising out of negligence, nuisance or breach of contractual, statutory or other duty1The phrase ‘personal injury’ has been judicially defined to include any disease and any impairment of a person’s physical or mental condition but does not include ‘distress’, ‘upset’, ‘fear’ and other similar human emotions: see Lees v Kaye [2022] EWHC 1151 (QB) at paras 56 - 58;
    •social fund loans.
 
1     The phrase ‘personal injury’ has been judicially defined to include any disease and any impairment of a person’s physical or mental condition but does not include ‘distress’, ‘upset’, ‘fear’ and other similar human emotions: see Lees v Kaye [2022] EWHC 1151 (QB) at paras 56 - 58 »
Issues with particular types of debt
Business debts
Business debts are ’qualifying debts’ for the purposes of a DRO, provided the client is personally jointly or severally liable for them.1For a full discussion of issues relating to self-employed clients, see L Charlton, ‘Debt Relief Orders and the Self-employed’, Adviser 155
Contingent liabilities
Unlike in bankruptcy, contingent liabilities are not qualifying debts because they do not fit the definition of a qualifying debt as being ’a liquidated sum payable either immediately or at some certain future time’.2s251A(2)(a) IA 1986
County court judgments
Where a debt is subject to a county court judgment, you should do your best to identify the actual creditor so they can be notified of the making of the debt relief order. If necessary, contact the court to establish who the creditor is. You should not enter the debt as a county court judgment and the court as the creditor. It is not the court’s responsibility to notify creditors of the making of a debt relief order and so the actual creditor will be unaware of it and so may continue to pursue the debt.
Credit union debts
Credit union debts are considered as secured debts to the extent of the value of the client’s shares. If the debt exceeds their value, the excess should be included in the DRO as an unsecured debt and the balance as a secured debt. The value of the client’s shares should not be included as assets if these have been assigned to the credit union. The full amount of the debt counts towards the debt limit (see here).
Foreign debts
Debts owed to overseas creditors should be included. Although the client is protected from enforcement action by the creditor in England and Wales, the DRO is not recognised in other countries, including European Union states and Scotland (which has its own legal system). The client may therefore face enforcement action in countries outside England and Wales, even after s/he has been released from liability for the debt in England and Wales.
Fraudulent debts
Unless otherwise specifically excluded (see here), debts incurred through fraud are qualifying debts which count towards the DRO debt limit (see here) and which must, therefore, be included in the application. Voluntary payments made by the client towards a fraudulent debt or its full repayment must be reported as a preference (see here) but not, for example, payments made by deduction from benefits, because such payments cannot be classed as ‘voluntary’. The client is protected from enforcement action from her/his creditors during the moratorium period (see here), but is not released from liability for such debts at the end of this period (see here). This means that benefit providers cannot make any deductions from benefit during the moratorium period even if the overpayment is fraudulent.
Guarantors
If a client has a DRO, this does not release any guarantor (or any other person liable for the debt, such as a co-debtor) from her/his liability.
If the client is guarantor for someone else’s debt, her/his possible future liability under the guarantee is not a qualifying debt. There must be an actual liability to pay an amount, either immediately or at some certain time in the future. This means that, until the borrower defaults, the client has no liability. If the borrower has defaulted, check the terms of the guarantee to see at what point the guarantor becomes liable and whether s/he is liable for the outstanding balance owed to the creditor or just the missed payments. The creditor might have asked the guarantor to make payments that have been missed by the main debtor. That does not mean the guarantor is automatically liable. The creditor usually has to send a default notice before the debt crystallises and can be included in the DRO.
Hire purchase agreements
If the agreement is in arrears, the amount due and unpaid must be included in the DRO. This includes the outstanding balance if this is due and payable under the terms of the agreement – eg, if it has been called in by the finance company.
If the agreement is in arrears but the outstanding balance is not due and payable, the arrears must be included in the DRO. The client can decide not to include the outstanding balance, if it is not due and payable (see above), but it will still count towards the £30,000 total debt limit (see here). Check the terms of the agreement and any notices the client has received from the finance company to see whether the agreement contains any terms under which it could be terminated if the client enters into any formal insolvency procedure.
If there are no arrears, the client can choose not to include the debt in the application and s/he remains liable for the remaining payments. The outstanding balance does not count towards the £30,000 total debt limit (see here) provided:
    •the agreement is not in arrears; and
    •the repayments are made by a third party where these are more than £75 a month or
    •the repayments are deemed as an allowable expense (see here).
HM Revenue & Customs debts
These debts should be scheduled individually in the DRO application and not totalled up and scheduled as one total debt owed to HM Revenues & Customs (HMRC).3See DRO News Special Bulletin, 29 January 2021 Where a tax credit overpayment has been transferred to the DWP and is being recovered from the client’s UC, the DWP should be scheduled as the creditor.
Mobile phone contracts
Following a complaint from Tesco, the DRO Team has reminded approved intermediaries that you must check whether a client’s mobile phone contract has only one agreement (for the airtime) or two agreements, the second being for the handset. Where only one entry is made in the DRO application in a case where the client has two separate agreements, the effect is that the provider closes the entire account (see DRO News, May 2023).
In a case where the client has two separate agreements, the DRO Team says that the second is likely to be an unsecured loan for the handset and the outstanding balance will need to be scheduled in the DRO (should it be a hire purchase agreement, the rules relating to hire purchase agreements should be followed: see above). Non-payment of the loan could lead to termination of the whole contract and so you need to check the terms of the agreement. Provided the airtime agreement is up-to-date, there is no need to schedule it in the DRO. See Debt Relief Orders: Guidance for debt advisers.
Motor Insurers’ Bureau claims
The official receiver says that any third-party claim that has either been settled by the Motor Insurers’ Bureau or is the subject of a judgment against the client is a liquidated sum. Any compensation for personal injury or death included in the claim is an excluded debt (see here). Any other types of claim (eg, for loss of earnings) are qualifying debts and should be included in the DRO (subject to the £30,000 total debt limit - see here).
Advance payments of universal credit
Payments on account or budgeting advances of universal credit (UC) are not loans. Before making an advance payment, the client is given notice of her/his liability to repay it, usually by deductions from subsequent payments of benefit. The Insolvency Service has confirmed that any advance payment which has not been fully recovered at the date of the application for a DRO is a qualifying debt. Note: While universal credit payments on account or budgeting advances are qualifying debts, social fund and budgeting loans are specific to legacy benefits and are excluded debts which cannot be included in a DRO but do not count towards the £30,000 total debt limit.
If deductions from benefit incorrectly continue after the date the DRO is made and these are subsequently repaid to the client, the official receiver does not regard these repayments as an increase in income or property for the purposes of revoking the order (see here).
Penalty charges
There are numerous penalty charge notices. Some of these are qualifying debts, some are excluded debts and others may be the subject of prosecution and a fine in the magistrates’ court as the potential consequences of non-payment. It is impossible to produce a comprehensive list of all the different penalty charges, but if the client discloses that s/he has an unpaid penalty charge, you should apply the following rules.4See L Charlton, ‘DROs and Penalties’, Adviser online, 13 August 2019
    •If the consequence of non-payment is that the penalty charge is recoverable as a civil court claim or can be registered for enforcement as if it were payable under a county court judgment, the penalty charge is a qualifying debt and should be included in the DRO.
    •If the consequence of non-payment is that the penalty charge can be registered in the magistrates’ court for enforcement as if it were payable under a conviction, the penalty charge is a fine and is an excluded debt.
    •If the consequence of non-payment is that the client may be summonsed to the magistrates’ court and prosecuted for an offence, the penalty charge is a qualifying debt and so should be included in the DRO. Any subsequent prosecution is not regarded as a ‘remedy in respect of the debt’ and a conviction could lead to a fine that would be an excluded debt.5See L Charlton, ‘Q&A with the Shelter Specialist Advice Service’, Quarterly Account 49, IMA, pp26-27 Note: Penalty charges issued for breaches of the coronavirus legislation fall into this category.6Reg 10 Health Protection (Coronavirus, Restrictions) (England) Regs 2020 No.350 (or their Wales equivalent, SI 2020/353 (W.80). See also Spotlight, October 2020, Shelter Specialist Debt Advice Service.
Unenforceable debts
In principle, all unpaid qualifying debts should be included in a DRO application and, unless the client owes money to a ’loan shark’ (see below), this is only an issue if the inclusion of the debt would take the client over the £30,000 total debt limit (see here).
The official receiver says that if an adviser has satisfied her/himself that a qualifying debt is unenforceable (eg, because it is ’statute-barred’ – see here) or is irredeemably unenforceable under the Consumer Credit Act 1974 (see here) and there is evidence that the debt is unenforceable (eg, a court order or letter from the creditor acknowledging this), the client can choose not to include the debt in the DRO and it does not count towards the £30,000 total debt limit.
A debt that has been written off arguably no longer fits the definition of a ‘qualifying debt’ (‘payable either immediately or at some certain future time’).7s.251A(2)(a) IA 1986 The DRO Team has confirmed it agrees with this view and, provided the creditor has confirmed in writing that the debt will not be pursued, then the client can choose to omit the debt from the DRO application. However, if it later emerges the debt was not written off, then not only will the client remain liable to repay the debt but, if it takes the client’s total debts to more than the £30,000 debt limit, the DRO could be revoked.
Note: if the official receiver subsequently finds out that a debt was not statute-barred or unenforceable and, as a result, the debts exceeded the £30,000 limit, the DRO is revoked.
Debts owed to loan sharks (see here) can be included in a DRO. However, the official receiver has said that if the client fears for her/his safety, s/he can choose to leave the debt out and it does not count towards the £30,000 limit.
Water charges
If the client has an unmetered account, her/his water charges to the 31 March following the date of the DRO application are a qualifying debt and so must be included in the DRO. Most water companies have ’insolvency clauses’ in their charges schemes whereby, in the event of the customer entering a formal insolvency procedure (such as bankruptcy or a DRO), her/his water charges are apportioned up to the date of the DRO/bankruptcy order and the customer is then issued with a new bill for the remainder of the charging year to 31 March.
Although the client can choose to pay the new bill, the water company’s view can be challenged, both as an attempt to exercise a remedy in respect of the debt and to contract out of the statutory insolvency scheme.8See P Madge, ‘Deep Water’, Adviser 143 and ‘Deep Water 2’, Adviser 177 Specialist advice should be obtained in such cases.
 
1     For a full discussion of issues relating to self-employed clients, see L Charlton, ‘Debt Relief Orders and the Self-employed’, Adviser 155 »
2     s251A(2)(a) IA 1986 »
3     See DRO News Special Bulletin, 29 January 2021 »
4     See L Charlton, ‘DROs and Penalties’, Adviser online, 13 August 2019 »
5     See L Charlton, ‘Q&A with the Shelter Specialist Advice Service’, Quarterly Account 49, IMA, pp26-27 »
6     Reg 10 Health Protection (Coronavirus, Restrictions) (England) Regs 2020 No.350 (or their Wales equivalent, SI 2020/353 (W.80). See also Spotlight, October 2020, Shelter Specialist Debt Advice Service.  »
7     s.251A(2)(a) IA 1986 »
8     See P Madge, ‘Deep Water’, Adviser 143 and ‘Deep Water 2’, Adviser 177 »
Qualifying conditions
In order to obtain a DRO, the client must be unable to pay her/his debts and must either be domiciled in England and Wales at the date of the application or have been ordinarily resident or carried out business in England and Wales during the previous three years.1Clients who are not British citizens and who are considering applying for a DRO should be advised to consult an immigration solicitor first, as it may affect their immigration status and any application for British citizenship In addition, on the date the official receiver determines the application (the ‘determination date’) s/he must not:
    •be an undischarged bankrupt, or subject to an individual voluntary arrangement (IVA), a bankruptcy restrictions order, a bankruptcy restrictions undertaking, a debt relief restrictions order or debt relief restrictions undertaking;
    •have had a DRO made within the previous six years (Note: if a client has been subject to a DRO within the previous six years that was revoked, s/he can apply for another DRO provided s/he currently meets all the other qualifying conditions)2Curr v The Insolvency Service, 2 June 2021, Salisbury County Court;
    •have a bankruptcy petition pending against her/him, unless the court has referred her/him for a DRO;
    •have total debts above the prescribed limit of £30,000 (this figure includes qualifying debts and secured debts but not excluded debts (see here)) (this figure increased from £20,000 on 29 June 2021);
    •have surplus monthly income above the prescribed limit of £75 (this figure increased from £50 on 29 June 2021);
    •have property (assets) valued at above the prescribed limit of £2,000 (this figure increased from £1,000 on 29 June 2021) (but see here when the client owns a single domestic motor vehicle).
Transactions at an undervalue and preferences
The official receiver can refuse to make a DRO if the client has entered into a transaction at an undervalue (see here) or given a preference to anyone (see here) at any time during the two years before the application is made or during the period between the application date and the determination date. Note: these are different time limits to those for bankruptcy. Note also: the client need not have intended to give a preference (although the official receiver considers this when exercising discretion).
Payments made directly to the client’s creditors by third parties using their own funds are not considered to be preferences for the purpose of a DRO order, neither are payments made by clients out of their surplus income to priority creditors. However, lump sum payments to priority creditors do need to be reported as preferences (including the source of the funds and why the payment was made) so that the DRO Team can make the decision, even if this is unlikely to be a decline (refusal).3See L Charlton, ‘Q&A with the Shelter Specialist Debt Advice Service’, Quarterly Account 48, IMA, p24 Voluntary payments made by the client towards a fraudulent debt or its full repayment must be reported as a preference; however, not, for example, payments made by deduction from benefits, because such payments cannot be classed as ‘voluntary’. Payments in respect of a fixed-penalty notice where the consequences of non-payment are potentially a prosecution and fine in the magistrates’ court are not considered to be preferences. The DRO Team has confirmed that contractual payments made to creditors are not considered to be preferences (although payments in excess of the minimum contractual payments or made with the intention of putting that creditor in a better position over other creditors do need to be reported as preferences) Similarly, payments made in accordance with a court order - eg, county court (or High Court) judgment, are not counted as preferences. Repayment of loans to friends and family are likely to be considered preferential and could lead to the DRO being declined.
Calculating the value of property and amount of surplus income
Alert: The DRO Team has confirmed that, for clients considering a DRO, the following cost of living payments announced by the government should be treated as income and apportioned over a reasonable period (maximum 12 months) when calculating that client’s surplus income:
    •£900 payment to households on means tested benefits payable in instalments of £301, £300 and £299, the first from spring 2023, the second in the autumn and the final payment in spring 2024;
    •£300 payment to pensioners in addition to their usual winter fuel payment in autumn 2023; and
    •£150 payment to clients in receipt of a qualifying disability benefit from June.
Note that only cost of living payments received in the month before the DRO application need to be included in the financial statement. Increases in the client’s outgoings should be reflected in the essential expenditure section of the client’s financial statement.
When calculating the value of property and the amount of surplus income, the following property is disregarded:
    •tools, books and other items of equipment (but not motor vehicles) that are necessary for the client’s personal use in her/his employment, business or vocation;
    •clothing, bedding, furniture, household equipment and the necessary provisions for satisfying the client’s basic domestic needs and those of her/his family;
    •a single domestic motor vehicle belonging to the client and worth less than the prescribed amount (currently £2,000, increased from £1,000 on 29 June 2021); or
    •a single domestic motor vehicle belonging to the client which has been specially adapted for the client’s use because of her/his disability.
Property is valued at its gross, rather than net, realisable (and not replacement) value and so clients who are homeowners do not qualify even if their property has negative equity.
When calculating the client’s surplus (or available) income, the official receiver must take into account any contribution made by any member of the client’s family to the amount necessary for the reasonable domestic needs of the client and her/his family. In practice, the client’s financial statement must be completed using standard financial statement principles (see here). A DRO is an individual remedy and so, if the client is a member of a couple, the financial statement must show the client’s available income and not that of the couple.4For guidance on drawing up financial statements if the client is a member of a couple, see P Madge, ‘A Single Statement’, Adviser 147 updated by L Charlton and republished in Adviser online, 8 January 2020
If the client has an attachment of earnings order, a direct earnings attachment or is having deductions from benefits made which will cease once the DRO is made (because creditors must cease exercising any remedy in respect of qualifying debts during the moratorium period), prepare the client’s financial statement on the basis of her/his earnings before the deductions are made. Include any essential expenditure that is needed for the client’s reasonable domestic needs, even if it is now unaffordable. Provided the client’s surplus income is still £75 a month or less, the application for a DRO can proceed. However, you should explain to the official receiver on the application form or in a separate email that the client is subject to an attachment or earnings order or deductions from benefits and that her/his budget has been prepared on the basis of including essential expenditure which is currently unaffordable, but will be affordable once the order or deductions stop.
 
1     Clients who are not British citizens and who are considering applying for a DRO should be advised to consult an immigration solicitor first, as it may affect their immigration status and any application for British citizenship »
2     Curr v The Insolvency Service, 2 June 2021, Salisbury County Court »
3     See L Charlton, ‘Q&A with the Shelter Specialist Debt Advice Service’, Quarterly Account 48, IMA, p24 »
4     For guidance on drawing up financial statements if the client is a member of a couple, see P Madge, ‘A Single Statement’, Adviser 147 updated by L Charlton and republished in Adviser online, 8 January 2020 »
Issues with particular types of expenditure
No payments can be included in the client’s essential expenditure for any debt included in the DRO.
The DRO Team does not routinely accept that payments made to support family members who live abroad are an allowable expense. You should obtain authorisation from the DRO Pre-order Team who will need a full explanation of the circumstances in which these payments are being made, including how long the payments have been made for, why the family are living apart and any other relevant information provided by your client, so they can be satisfied the expenditure meets a ‘reasonable domestic need’ and make a decision accordingly.
Rent arrears and payments under controlled agreements
Rent arrears are not an allowable expense, whether the rent arrears are payable under a suspended possession order or under an agreement made with the landlord. However, rent arrears can be paid after a DRO is made, either from the client’s surplus income or by a third party.
The position with payments under controlled goods agreements has recently changed. Any payments made to the enforcement agents to prevent them removing the goods must usually be made from the client’s surplus income or by a third party but are an allowable expense if the goods subject to the controlled goods agreement are for ‘the reasonable domestic needs’ of the client and her/his family.
Hire purchase payments
Ongoing hire purchase payments are only an allowable expense if:
    •the client chooses to omit the outstanding balance from the DRO (see here); and
    •the goods would be disregarded goods if they belonged to the client - ie, if they are a single domestic motor vehicle worth less than £2,000 or one that has been specially adapted because the client has a disability or where the goods are necessary to meet the client’s basic domestic needs; or
    •when the goods are not disregarded but the expenditure is considered necessary to meet the client’s basic domestic needs (in the case of a vehicle worth more than £2,000, an email should be sent to the DRO Team at the time the DRO application is submitted detailing why the client should be allowed to continue making the repayments. The factors the DRO Team will consider including when the agreement was taken out, whether public transport is available and whether the repayments compare favourably with the cost of public transport).1There is a discussion of this issue in relation to vehicles in the Technical Guidance for Official Receivers at para 24.20 and following.
 
1     There is a discussion of this issue in relation to vehicles in the Technical Guidance for Official Receivers at para 24.20 and following. »
Issues with particular types of property
Cash
Cash in hand or in a bank account can be disregarded if it is intended to be used to pay for the essential expenditure listed in the income/expenditure section of the application. Regardless of its original source, cash is property unless it represents arrears of disability benefits (ie, attendance allowance (AA), disability living allowance (DLA), personal independence payment (PIP), disability premiums paid with legacy benefits, the severe disability premium paid with pension credit (PC) and the disabled child element of UC) or equivalent benefits paid to armed forces personnel.
Money owed
If the client is owed money, it is regarded as property unless s/he has unsuccessfully attempted to recover it and these attempts are documented. Arrears of child support and compensation owed to the client through the magistrates’ court are not property for this purpose.
Pensions
Any undrawn ‘approved’ pension entitlement should not be taken into account when assessing the value of the client’s property.1Failed pension schemes that would have been ‘approved’ and which have been taken over by the Payment Protection Fund will continue to be ‘approved’ for DRO purposes. Chapter 57 of the Technical guidance for official receivers states that unapproved pensions are rare. The Insolvency Service’s position is that a pension with a recognised national provider or recognised national employer will be approved. However, if the client is aged 55 or older so that she/he would be entitled to withdraw all or part of her/his pension as a lump sum, you must assess whether she/he can use that pension to repay all of her/his debts in full in order to determine whether the client can meet the requirement of being unable to pay her/his debts. Where the pension is already in payment, any regular income from that pension must be taken into account when assessing the client’s available income.
Firstly, you will need to establish whether the client has a ‘defined contribution’ or a ‘defined benefit’ pension, as in the case of the latter it may not be possible to access the pension pot as a lump sum. In the case of a defined contribution pension, you must:
    •check a recent pension policy statement in order to assess its value; and
    •confirm if the client can take money from the pension to pay of her/his debts within ‘a reasonable timescale’.
It is usual for the first 25% of a pension lump sum to be accessible tax free. However, you will need to allow for any fees payable (this information can be obtained from the pension provider) and any tax on the remainder that will be deducted at source. There is information on ‘Taking your whole pension pot in one go’ on the MoneyHelper website.
Where the realisable value of the client’s pension (together with any other available assets) is less than the client’s total debts, then she/he is unable to pay their debts. Where the realisable value of the client’s pension (together with any other available assets) is only ‘marginally’ above the client’s total debts, you must make a ‘realistic assessment’ of whether those debts can be paid in full, having regard to how long any realisation will take and the fact that the client’s debts may increase during this time. The DRO Team says that ‘urgent household costs’, such as maintenance or repairs, can be taken into account when making this assessment, but that, if the value of the client’s pension (and other assets) is enough to repay the client’s debts in full, and the client has access to the pension and can get the funds they need to do this, the client will not meet the eligibility criteria. The DRO Team acknowledges there may be an exception where there is a contractual or other legal reason the client may not be able to access their pension. The DRO Team has to date provided no guidance on the meanings of ‘marginally’, ‘realistic assessment’, ‘reasonable timescale’ or the scope of ‘urgent household costs’ (other than maintenance or repairs).
When the client is aged 54 or younger, the DRO Team says that you must still establish if the client has any pensions and, if so, whether they are ‘approved’ or not. If they are not ‘approved’, they are assets and their value must be listed in the assets page of the DRO application and the client may well be over the asset limit, so will not be eligible for a DRO. If they are ‘approved’, DRO Team guidance is that you do not need to value them and you can record £0 for pensions value in the DRO application. DRO Team advice is that you should advise clients who will attain the age of 55 during the moratorium that accessing a pension during the moratorium would need to be reported as this would affect their assets and/or surplus income limits and so could lead to revocation of the DRO.
Note: The DRO Team is no longer pre-assessing pensions prior to submission of the DRO application. If you have assessed that the realisable value of a client’s pension is above the client’s total debts, but a DRO application is nevertheless submitted, it must be accompanied by a supporting email explaining why you or your client believe the client is still unable to pay their debts. This email should be sent to: DRO.Preorder@insolvency.gov.uk with the subject ‘Pension’ and the application number. The Preorder Team may get back to you if they have questions or need any further information.
The section entitled ‘Undrawn Pensions and Occupational Pensions’ in the Debt Relief Orders: Guidance for debt advisers has been removed and replaced with new sections entitled ‘Pensions’, ‘Pensions as income’, ‘Pensions accessible as a lump sum’ and ‘Pensions as an asset’. If you are in any doubt as to how to proceed, you should seek specialist advice.
Right to claim compensation
The client’s right to claim compensation from another person or organisation is potentially property, but not if the claim is purely personal to the client – eg, for injuries to the person, feelings or reputation. However, if the claim includes a claim for a ’pecuniary loss’ (eg, lost wages), only that part of the claim is regarded as property.2See Insolvency Service, ‘Personal Injury Compensation’, DRO A-Z Compensation from the Windrush scheme is treated in a similar way to compensation for personal injury claims.3See ‘Windrush compensation and insolvency’, L Charlton, Adviser online, 19 September 2019 Claims for compensation for wrongful arrest or unlawful detention are not regarded as property, but any claim for pecuniary loss is regarded as property (this represents a recent change in DRO Team policy as previously both elements were treated a property). Claims for compensation to the Criminal Injuries Compensation Authority are not regarded as property, even if pecuniary losses are included. A claim for compensation for unfair dismissal (a claim that it was unfair to dismiss the employee) is not regarded as property, but compare that to claims for compensation for wrongful dismissal and/or discrimination. A claim for compensation for wrongful dismissal is a claim for breach of contract and is regarded as property. A claim for compensation for injured feelings in a discrimination case is not regarded as property but a claim for financial losses - eg. wages is regarded as property. You should, therefore, check the nature of any employment related claims being pursued by the client.
If the client is pursuing a claim, her/his solicitor should be contacted to confirm whether or not the other party has accepted liability and how much compensation the client is likely to receive, and then specialist advice should be sought about whether the client’s right counts as property for DRO purposes.
Note: if a client becomes entitled to receive compensation during the 12-month moratorium period (see here) or even afterwards, this could lead to any DRO being revoked. This also applies to rights to action that are not regarded as property at the pre-order stage. It might be in a client’s best interests to resolve any potential or pending compensation claims before deciding whether or not a DRO is the most appropriate option.
This advice also applies to clients who have outstanding claims for refunds of premiums for mis-sold payment protection insurance in connection with any credit agreements (see here). The official receiver says:
    •refunds are not property until the creditor or insurance company accepts the claim and the amount of any refund has been agreed;
    •creditors can exercise any contractual right to set off the refund against any debt owed by the client. If this is done before the DRO application is made, it is not regarded as a preference. If it is done during the 12-month moratorium, it is not regarded as a remedy in respect of the debt;
    •any refund paid to the client during the moratorium period could result in the DRO being revoked.
Any funds received before the DRO application can be paid pro rata to qualifying creditors without involving any issue of preference.
 
1     Failed pension schemes that would have been ‘approved’ and which have been taken over by the Payment Protection Fund will continue to be ‘approved’ for DRO purposes. Chapter 57 of the Technical guidance for official receivers states that unapproved pensions are rare. The Insolvency Service’s position is that a pension with a recognised national provider or recognised national employer will be approved. »
2     See Insolvency Service, ‘Personal Injury Compensation’, DRO A-Z  »
3     See ‘Windrush compensation and insolvency’, L Charlton, Adviser online, 19 September 2019 »
Making the application
The application is made to the official receiver online through an approved intermediary.1See A Cumming, ‘DRO 2’, Quarterly Account 43, IMA It must be made on a prescribed form and contain prescribed information. Section 251B(2)(a) TCEA 2007 requires the application to include a list of the debts to which the client is subject, specifying the amount of each debt and the creditor to whom it is owed. The DRO Team has said that intermediaries should not combine debts to the same creditor in the application - eg, multiple council tax accounts or tax credit overpayments. A fee is payable (currently £90) and there is no remission. The fee can be paid by instalments through Payzone or a post office. There is no time limit for payment of the fee, but clients who are close to the maximum debt ceiling should be aware that accruing interest and charges may take them over the limit if they take too long to pay the fee. However, should the application not be opened for six months, an email will be sent to the intermediary informing her/him that it will be deleted if not updated within 28 days. Should this happen, any fee paid will be refunded to the client.
In order to reduce the costs and speed up the process, the official receiver makes certain assumptions when determining an application, unless s/he has reason to believe otherwise, that:
    •the client is unable to pay her/his debts; and
    •the specified debts are qualifying debts; and
    •the client satisfies the conditions for a DRO (see here).
On receipt of an application and confirmation that the fee has been paid, the official receiver may:
    •defer consideration of the application to enable her/him to make enquiries; or
    •refuse the application on the grounds that:
      ◦the client does not meet the criteria; or
      ◦the client has given false information in connection with the application; or
      ◦the application is not on the prescribed form or does not contain the prescribed information; or
      ◦the client has not answered questions to the official receiver’s satisfaction; or
    •make a DRO containing details of the client’s qualifying debts.
The official receiver also carries out verification checks. The Individual Insolvency Register is checked to see if the client is currently an undischarged bankrupt, subject to an IVA, a bankruptcy restrictions order or undertaking, or a debt relief restrictions order or undertaking. The official receiver also carries out a credit reference check through Experian to check the client’s identity, residence and total debts.
Common reasons for DROs being declined are because:
    •the client has made a preference in the previous two years;
    •the client’s total debts are found to exceed the debt limit;
    •the client has had a previous DRO in the last six years.
It is good practice for advisers to carry out these checks themselves and to address any issues disclosed before applying for a DRO – eg, if the credit report incorrectly shows that the client’s total debts are over £30,000. If it is not possible to get the Experian report amended before submitting the DRO application, the evidence demonstrating the inaccuracy of the report should be submitted to the official receiver by email or fax before the application itself, with a request that the evidence be taken into account when considering eligibility for the DRO. Similarly, if a check of the Individual Insolvency Register reveals that the client is subject to an IVA but your understanding is that the IVA has either been completed or failed and should, therefore, be shown as terminated, you should contact the IVA provider, obtain the following termination documents and send these to the DRO Team when submitting the application:
    •Covering letter from the IVA provider confirming that the IVA has either been completed or terminated, making reference to rule 8.31 I(E&W)R 2016;
    •Certificate of Completion/Termination;
    •Copy of the Report to Creditors; and
    •Final Receipts and Payments (or, if none, this should be confirmed in the covering letter).
Note: A recent unreported county court decision has held that a DRO that has been revoked has been cancelled, nullified or rescinded and, therefore, never existed.2Curr v The Insolvency Service, 2 June 2021, Salisbury County Court The DRO Team has accepted this decision, which means that, when a client has had a DRO within the previous six years and that DRO was revoked, that will not prevent the client from applying again (provided, of course, they meet all the other qualifying conditions). However, the DRO Team says that you must email them with an explanation of how and why the client now satisfies the qualifying conditions and it will then ‘give consideration’ to the re-application. Otherwise, there is a risk the application will be declined as the automated process will reveal the previous DRO.
Some clients might be worried that, if a qualifying debt is listed, the creditor will find out on being notified of the making of the DRO and subject the client and/or a member of their family to violence - eg, a debt owed to an individual such as a private landlord. All qualifying debts must be included in the application, but you can leave the creditor’s address blank when listing the debt and this will prevent the creditor being sent any notification of the debt. If you leave the address blank for this reason, you must send a supporting email to the DRO Team when submitting the application. However, at the end of the moratorium, the creditor will not know that the debt has been written off and can no longer be recovered. In those circumstances, you should consider whether a person at risk of violence (PARV) order might be more appropriate (but this assumes the creditor does not already know the client/family’s current address).
Note: see here and here if the client or a member of her/his family is at risk of violence and does not want details of her/his address to be entered on the Individual Insolvency Register.
 
1     See A Cumming, ‘DRO 2’, Quarterly Account 43, IMA »
2     Curr v The Insolvency Service, 2 June 2021, Salisbury County Court »
After the application is made
Once the DRO application is made, the client must co-operate with the official receiver. This includes providing any information that the official receiver may require.
If the official receiver declines to make the order, s/he must give her/his reasons to the client. The fee is not refunded. The client can apply to the court and ask it to overrule this decision.
If an order is made, details are registered in the Individual Insolvency Register (see here) (and on the client’s credit reference file). If the client has reasonable grounds for believing that s/he or any member of her/his family who normally resides with her/him would be at risk of violence if her/his current address or whereabouts was disclosed, this can be flagged up on the application form. Where applicable, the client can make an application to the court for an order confirming that her/his details should not include her/his address. The application (known as a person at risk of violence (PARV) order) is made to the court for the insolvency district in which the client resides.1r9.22 I(E&W) Rules 2016 There is no prescribed form, but the Insolvency Service has produced a number of template forms that are available at gov.uk/government/publications/rule-204-debtor-application-for-an-order-for-non-disclosure-of-current-address. The court fee is £280. Remission can be applied for, although advisers report that some courts are not charging the fee even where the client does not strictly qualify for remission because of the nature of the application.
Where a client needs a PARV order, the DRO Team says this should be obtained prior to the submission of the DRO application if at all possible and a copy emailed to the Pre-order Team before or when the application is submitted. The application can be made once the DRO ID number is generated. Where an application indicates a PARV order is required to withhold the client’s address (ie, the ‘address withheld’ box in the application has been ticked), but this has not yet been obtained, the DRO Team will not process the application until the PARV order has been obtained (previously, as a coronavirus concession, the DRO Team would process the application, but this temporary concession has now been withdrawn). You must keep the DRO Team informed of the progress of the client’s PARV application and email a copy of the order to them, assuming it is made.2Where the client moved due to a risk of violence during the moratorium period, s/he would need to obtain a PARV order for the new address so this could be withheld from the Individual Insolvency Register
Any creditor listed in the DRO may object in writing to the DRO being made or to the inclusion of details of its debt(s) on the prescribed grounds (ie, that the client is not eligible for the DRO; it is not a valid ground that the creditor does not want to be included) within the prescribed period – 28 days after the creditor has been notified of the order.
The official receiver must consider every objection and may conduct an investigation if s/he considers it appropriate. If the official receiver decides to revoke the DRO, s/he must give the client details of the objection and the grounds and give the client 21 days in which to respond, stating why the order should not be revoked. If the official receiver decides to revoke the DRO, s/he can do so with immediate effect or at a future date, no more than three months later in order to give the client time to make payment arrangements with her/his creditors. The client can apply to the court to overrule this decision.
 
1     r9.22 I(E&W) Rules 2016 »
2     Where the client moved due to a risk of violence during the moratorium period, s/he would need to obtain a PARV order for the new address so this could be withheld from the Individual Insolvency Register »
Reporting changes in circumstances
Alert: The DRO Team has confirmed that, if the client gets a backdated payment of the limited capability for work-related activity element of UC during the moratorium because her/his work assessment was delayed by the coronavirus outbreak, this must be reported to the DRO Team but will not lead to revocation of the DRO (backdated payments of the limited capability for work-related element are not usually disregarded, see below). The DRO Team has also confirmed that clients receiving the £150 council tax rebate during the moratorium do not need to report receipt of this as it will, in practice, be set against cost of living increases. Similarly, the DRO Team has confirmed that cost of living payments received during the moratorium are not considered as windfall payments nor as an increase in income requiring reassessment of surplus income.
Once a DRO is made, the client must inform the official receiver as soon as reasonably practicable of any increase in her/his income during the moratorium period, or of any property s/he acquires. The purpose of this is to ensure that s/he remains eligible for the order. If not, the DRO could be revoked. Note: The DRO Team has confirmed that it does not need to be notified of decreases in the client’s surplus income or of one-off payments of less than £2,000 (see DRO News, May 2023) (but, if this payment when taken with other property the client already has takes the client over the £2,000 property limit, then it seems that it would need to be reported). When reporting an increase in income, an up-to-date financial statement should also be provided, amending any items of expenditure that have changed since the date of the application. If the client’s surplus income is found to exceed £75 a month, the client’s DRO could be revoked.
The annual uprating of benefits is not a change that must be reported. Receipt of winter fuel payment or a maternity grant must be reported and do not lead to revocation of the DRO. Ongoing payments of AA, DLA, PIP and ‘equivalent benefits’, including disability premiums paid with legacy benefits and the severe disability premium paid with PC, can be offset against ‘adult care costs’ and backdated arrears of these benefits and arrears of disability premiums are disregarded, but their receipt must be reported. The DRO Team has also confirmed that if a client is receiving the disabled element of UC for a child in her/his care, any lump sum or ongoing payments can be disregarded/offset. Arrears and on-going payments of employment and support allowance itself are not disregarded and neither are the limited capability for work/limited capability for work and work-related activity elements of UC.1However, a ‘transitional payment’ of UC where the client was previously in receipt of the severe disability premium could be disregarded. See Shelter Specialist Advice Service, ‘Enquiry of the month’, December 2019 available in the Resources Directory of the NISP section of the IMA website. The DWP can now pay lump sums of some backdated benefit payments in monthly instalments, but this can only be done with the client’s consent. Where the client has elected to receive lump sums of these benefits by instalments, the DRO Team treat these as income. In some cases, these can be disregarded or offset against ‘adult care costs’ as above. Where that is not the case, you should consider whether receipt of monthly instalments will take the client over the £75 a month surplus income parameter when advising the client on whether it is in their best interests to agree to this.2Social Security Benefits (Claims & Payments) (Amendment) Regs 2021. See also, Shelter Specialist Advice Debt Service, ‘Enquiry of the Month’, March 2022
Prior to 29 June 2021, the effect of the DRO Team’s lump sum protocol was that, unless accompanied by an increase in income that took the client’s surplus income over what was then the £50 a month surplus income parameter, provided the client reported the acquisition of any property (including lump sums of income) to the DRO Team within 14 days and the value of the property did not exceed 50 per cent of the client’s qualifying debts, the DRO Team treated any property acquired by the client during the moratorium period as follows.
    •If the value of the property (including lump sums) was £1,000 or less, the DRO Team did not revoke the DRO.
    •If the value of the property was between £1,000 and £1,990 (includng lump sums), the DRO Team considered all cases on their merits.
    •If the value of the property exceeded £1,990 (including lump sums), the DRO was usually revoked unless there were exceptional circumstances.
With effect from 29 June 2021, provided increases in income and/or acquisitions of property (including lump sums) during the moratorium are reported to the DRO Team as above, if the client’s surplus income does not exceed £75 a month or the value of the property acquired is not more than £2,000, the DRO is not revoked. If the value of any property (including lump sums) received is more than £2,000, the DRO Team takes into account all the client’s circumstances and makes its decision as to whether or not to revoke the DRO based on the merits of the case. Note: this applies to DROs made before 29 June as well as to DROs made on or after that date. However, if the DRO was made before 29 June 2021 and an additional debt is discovered during the moratorium, which takes the client’s debts over the £20,000 limit that applied when the DRO was made, the new debt limit will not apply as the client was not eligible to apply for a DRO at the time when the DRO was made.
The only situation in which a DRO must be revoked is if the client dies. In all other cases, the decision to revoke is discretionary and the official receiver should take the individual circumstances of the case into account before making a decision.3See L Charlton, ‘Something to report - Parts 1 & 2’, Adviser 187 and 189
 
1     However, a ‘transitional payment’ of UC where the client was previously in receipt of the severe disability premium could be disregarded. See Shelter Specialist Advice Service, ‘Enquiry of the month’, December 2019 available in the Resources Directory of the NISP section of the IMA website. »
2     Social Security Benefits (Claims & Payments) (Amendment) Regs 2021. See also, Shelter Specialist Advice Debt Service, ‘Enquiry of the Month’, March 2022 »
3     See L Charlton, ‘Something to report - Parts 1 & 2’, Adviser 187 and 189 »
The effect of a debt relief order
Once the DRO is entered on the Individual Insolvency Register, a moratorium takes effect in respect of the specified debts, and the creditors specified in the order have no remedy in respect of their debts. This means they cannot force the client to pay the debts included in the DRO. They are also prohibited from issuing proceedings to enforce their debts or from presenting a bankruptcy petition without permission of the court. Any pending court proceedings may be stayed. The moratorium period is 12 months. During the moratorium, the client is subject to the same restrictions as in bankruptcy – eg, on obtaining credit (see here).
The making of a DRO revokes an enduring power of attorney and also a lasting power of attorney so far as it relates to the donor’s property or affairs.1s13 and Sch 4 para 17 Mental Capacity Act 2005
Unless the moratorium period is terminated early, at the end of the moratorium the client is discharged from her/his qualifying debts listed in the order (but not from any debts incurred through fraud2For the meaning of fraud in this context, see Ivey v Genting Casinos t/a Crockfords [2017] UKSC 67 (Adviser 183 abstracts).).
 
1     s13 and Sch 4 para 17 Mental Capacity Act 2005 »
2     For the meaning of fraud in this context, see Ivey v Genting Casinos t/a Crockfords [2017] UKSC 67 (Adviser 183 abstracts). »
Payments to creditors
With a few exceptions, clients cannot make payments to any creditor included in the DRO but, in appropriate cases, a third party can make the payments from her/his own income on the client’s behalf (see here). The rights of secured creditors (including if an enforcement agent has a controlled goods agreement) are unaffected and the client may continue to make payments from her/his surplus income to protect the goods. Alternatively, a family member or friend could continue to make the payments (see above).
The client can pay any rent arrears included in the DRO out of her/his surplus income if s/he is at risk of repossession or if, for example, her/his landlord will not agree to a transfer request unless the arrears are paid. Alternatively, a family member or friend could continue to make the payments.
Although the client could apply to vary an existing suspended possession order to provide for payment of her/his current rent only or ask the court to suspend any post-DRO possession order on payment of current rent, there is no guarantee that the court will make such an order and specialist housing advice should be obtained before an application is made.
If a hire purchase debt is included in a DRO, a third party can either make the payments from her/his own income on the client’s behalf in order to protect the goods from repossession by the creditor or arrange to transfer the agreement into her/his own name with the consent of the creditor and the client.
Overpayments of benefits or tax credits can only be included in a DRO if the recovery decision has been made before the date of the DRO application. Such overpayments cannot be recovered by deductions from ongoing benefits or tax credits either during or after the moratorium period (unless the debt was incurred through fraud when recovery by deductions can be resorted to after the end of the moratorium period1SSWP v Payne and Cooper [2011] UKSC 60 (Adviser 149 abstracts)). The Department for Work and Pensions (DWP) says that where the overpayment period is either entirely before the date of the DRO or spans the date of the order, its policy is to to suspend recovery until the end of the moratorium period when the debt will be written off it if was included in the DRO, but normal recovery action will recommence in the case of fraudulent overpayments. If the overpayment decision was not made until after the DRO was approved (so that it could not be included), it is DWP policy to suspend recovery of that overpayment until the end of the moratorium period. The DWP applies the same policy to social fund loans even though they are excluded debts.2DWP, Benefit overpayment recovery guide, December 2018, paras 6.10-6.12 and 6.16-6.17 The DWP should be challenged if it fails to comply with this policy and continues with deductions regardless of the DRO, although if the overpayment has been included in the order, the DWP could be challenged for exercising a remedy in respect of the debt.
 
1     SSWP v Payne and Cooper [2011] UKSC 60 (Adviser 149 abstracts) »
2     DWP, Benefit overpayment recovery guide, December 2018, paras 6.10-6.12 and 6.16-6.17 »
The role of intermediaries
In order to obtain a DRO, a client must apply through an approved intermediary. Intermediaries are authorised by competent authorities (such as Citizens Advice and the IMA) and cannot charge fees in connection with an application. The responsibilities of intermediaries include:
    •assisting clients to make applications;
    •checking that applications have been properly completed;
    •sending applications to the official receiver.
Intermediaries must:
    •inform the client that the official receiver carries out verification checks (see here);
    •assist the client to complete the online application if, after having the various debt options explained to her/him, s/he wishes to apply for a DRO. An intermediary must submit an application to the official receiver if instructed to do so by the client, even if the client has been advised that there are other available options, and/or that the application will be rejected and s/he will consequently lose the £90 application fee;
    •draw the client’s attention to all the qualifying conditions, the effects of a DRO (including the duties and restrictions on the client as well as the moratorium period and discharge from the scheduled debts); and
    •explain the possible consequences of providing false information or omitting information from a DRO application – eg, the possibility that the order could be revoked and the consequences of that in relation to her/his creditors, plus possible criminal and/or civil penalties such as a debt relief restrictions order (see here).
An intermediary may also assist the client to:
    •identify what information is required to complete an application;
    •establish whether or not her/his total debts, income and assets exceed the prescribed amounts; and
    •ensure the application is fully completed.
Intermediaries are advised to write ’confirmation of advice’ letters covering these areas and, if the advice is that the client is not eligible for a DRO, to get the client to sign the letter if s/he insists on going ahead. The use of a standard post-DRO letter reminding clients of their responsibilities and what happens next is also recommended.
The Insolvency Service expects intermediaries to satisfy themselves that applications are accurate and, where possible, to verify the information supplied by clients. If the client insists on submitting the application against the intermediary’s advice, because it is clear s/he does not qualify (eg, the client’s debts exceed the £30,000 limit), then the application can indicate this.
To assist intermediaries, the Insolvency Service has provided Debt Relief Orders: Guidance for debt advisers (formerly the DRO A-Z) containing technical information, which is updated from time to time and which now includes the date it was last updated, together with a summary of the topics updated which can be accessed by clicking on ‘See all updates’. The DRO Team publishes a regular newsletter (available from your competent authority). The Insolvency Service has also finally published an updated version of what was previously known as the Intermediary Guidance Notes on the GOV.UK website. This now comprises two documents: DRO Guidance for Approved Intermediaries and How to complete and submit the DRO application. The Debt Relief Orders: Guidance for debt advisers and the updated Intermediary Guidance Notes are available at gov.uk/guidance/debt-advisor-tools-and-information. It is essential that intermediaries familiarise themselves with, and use, these documents when advising clients and preparing applications.
A DRO toolkit is also available, which can be accessed either in AdviserNet, the IMA’s website (i-m-a.org.uk) or at Wiseradviser (wiseradviser.org).
The role of the official receiver
The official receiver can amend the DRO during the moratorium period to correct errors or omissions. However, s/he cannot add any debt(s) not specified in the application. This means that, unlike in bankruptcy (where provable debts are covered by the order even if they are not included in the application), if any debt which would have been a qualifying debt for DRO purposes is omitted from the application, it cannot be added at a later date. Ultimately, it is the client’s responsibility to inform the intermediary of all her/his debts. It is advisable for the client to obtain a copy of her/his credit reference reports (and essential to obtain a report from Experian) before an application is completed to ensure, as far as possible, that all qualifying debts are included.
In addition to being under a duty to report to the official receiver certain changes of circumstances, including if s/he moves to a new address, and to co-operate with requests for information from the official receiver, if the client becomes aware after the order is made of any error or omission in the information supplied in support of the application, s/he must inform the official receiver as soon as possible.
The DRO notification letter sent to creditors also invites them to inform the official receiver of any conduct or behaviour by the client that may be relevant.
The official receiver may revoke the order (but is not required to do so) if:
    •information provided by the client is incomplete, inaccurate or misleading;
    •the client has failed to co-operate with the official receiver or provide the required information;
    •a bankruptcy order has been made against the client or s/he has proposed an IVA to her/his creditors;
    •the official receiver should not have been satisfied that the client met the conditions for making it (see here);
    •at any time after the client applies for an order, s/he no longer meets the conditions on the monthly surplus income and/or assets;
    •the client dies (in which case, the order must be revoked).
Common reasons for revocation are:
    •the value of the client’s property (assets) is found to be in excess of £1,000;
    •the total of the client’s debts is found to be in excess of £20,000;
    •the client has died.
The official receiver can revoke the DRO either with immediate effect or at a specified date no more than three months ahead. S/he must consider whether the client should be given the opportunity to make arrangements with her/his creditors for payment of her/his debts.
A creditor or client who is dissatisfied with the official receiver’s decision can apply to the court to overrule this decision. In practice, the official receiver reconsiders any decision if asked to do so.1See L Oliver, ‘Consultancy corner: challenging the OR’s decision to revoke a DRO’, Adviser 185. Fee 3.12 is now £95.
Clients who have had a DRO revoked no longer need to wait six years from when that DRO was made to apply for another DRO (see here). If that is being considered, you should explore the reason(s) the previous DRO was revoked, when this was and how how the issues that led to the revocation have been resolved. This is because the DRO Team may want to be satisfied that this was was done appropriately – eg, did not involve a preference or a transaction at an undervalue being made.
 
1     See L Oliver, ‘Consultancy corner: challenging the OR’s decision to revoke a DRO’, Adviser 185. Fee 3.12 is now £95. »
Offences and restrictions
As with bankruptcy, it is a criminal offence for the client to:
    •make false representations or omissions in connection with a DRO application;
    •fail intentionally to co-operate with the official receiver or knowingly or recklessly make false representations or omissions in relation to information supplied in connection with a DRO application or after a DRO is made;
    •conceal or falsify documents;
    •dispose of property fraudulently;
    •deal fraudulently with property obtained on credit.
During the moratorium (or while a debt relief restrictions order or undertaking is in force), the client cannot:
    •obtain credit of £500 or more without revealing her/his status to the lender;
    •trade in a name that is different from that in which the DRO was made without revealing the name in which the order was made to everyone with whom s/he has business dealings;
    •be a director of a limited company without the permission of the court.
A breach of any of these requirements is a criminal offence.
If, during the course of any enquiries, the official receiver believes that the client has been dishonest or ‘blameworthy’ (either before or during the period of the DRO), s/he can apply for a debt relief restrictions order, or obtain an undertaking from the client, on the same grounds as a restrictions order or undertaking can be applied for in bankruptcy and for the same two- to 15-year period (see here). The effect of a debt relief restrictions order or undertaking is to extend the restrictions that applied during the moratorium. Unless the court orders otherwise, the revocation of the DRO does not affect any debt relief restrictions order or undertaking.