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Debt Relief Restriction Orders

If you're subject to a Debt Relief Order (DRO) and the Official Receiver considers you have been blameworthy and/or reckless in contributing to your DRO, or have othrewise acted dishonstesly, an application to the court for a Debt Relief Restriction Order (DRO) can be made.

A DRRO is similar to BRO (Bankruptcy Restriction Order).

Debt Relief Restriction Order Restrictions

The restrictions on someone subject to a DRO nornally lasts 1 year. A DRRO can extend these for up to 15 years and includes:

  • You may not obtain credit of £500 or more, either alone or jointly with someone else, without telling the lender you are within a DRO.
  • You may not trade (directly or indirectly) in a name that is different from the name under which you were granted a DRO, without telling all those with whom your do business, the name under which you were granted a DRO.
  • You may not be involved (directly or indirectly) with the promotion, management or formation of a limited company, and may not act as a company director, without the court's permission.
  • You may not act as an insolvency practitioner, or as the receiver or manager of a company on behalf of debenture holders.

Failure to comply to DRRO restrictions is a criminal offence.

When can the Official Receiver apply for a DRRO?

The official receiver must apply to court for a DRRO within period of the debt relief order, (12 months) although they can ask the court for permission to apply later if good reason for a DRRO come to light later.

Interim DRRO

The official receiver can apply to the court for an interim DRRO, that is, before the court hears the DRRO application. If granted, the restrictions will apply from the date of the interim order until the court considers the application for a DRRO. The court will grant an interim DRRO if the DRRO application is expected to succeed and it's in the public interest to make an interim DRRO. An interim DRRO has the same effect as a DRRO.

The most common reasons for a DRRO are

  • Incurring debts that you knew you had little chance of repaying.
  • Giving away assets or selling them at less than their value.
  • Deliberately paying off some creditors in preference to others.
  • Gambling or making rash speculations or being unreasonably extravagant.
  • Failing to keep or produce records that would explain a loss of money or property.
  • Fraud, or fraudulent breach of trust.
  • Failing to co-operate with the official receiver.
  • Causing your debts to increase by neglecting your business affairs.
  • Failing to supply goods or services that have been paid for.
  • Continuing to trade knowing you could't pay your debts.

The more blameworthy your conduct, in the court’s opinion, the longer the DRRO is likely to last.

Debt Relief Restrictions Undertaking (DRRU)

The official receiver will write to inform you of their intention to apply for a DRRO with the reasons stated, giving you 21 days to respond.

If you accept the allegations, you may be abke to enter into a Debt Relief Restrictions Undertaking (DRRU). A DRRU has the same effect as a DRRO, but if you enter into a DRRU you will not have to attend a court hearing. Because of your admission of guilt, the duration of the restrictions is likely to be shorter than if the court made a DRRO.

If you do not accept the official receiver’s allegations, or you do not respond within 21 days to their letter of intention to apply for a DRRO, they will apply to court for a DRRO.