The Covid-19 pandemic in the UK has forced Government to rethink their insolvency procedures and have introduced for instance ‘debt respite’ or a ‘breathing space’ period where you can be protected from your creditors for up to sixty days.
Your debts do not simply disappear whilst you are in the ‘prison bubble’ and will still be there when you are released if positive action is not taken. I have come across one case where HMRC tried to serve papers on an individual in prison with the intention of bankrupting them. Whilst unsuccessful on that occasion they did serve the papers at the individual’s registered address on release!
Over the next few articles, I will try and demystify personal insolvency and the alternative processes available to bankruptcy including the bankruptcy process itself.
This is an administrative scheme that allows debtors (those that owe money) with very little money to effectively crystallise and write off their debts.
The Official Receiver’s fee is £90 and this can often be paid in instalments or by one of the charity advisers that sometimes provide a grant to cover it.
The GOV.UK website summarises the criteria as follows:
The DRO application will contain a list of the debts to be liquidated – a schedule of debts, and the DRO will remove all debts in that schedule.
The DRO does not though impact on the right of a secured creditor to recover their debt such as a leased vehicle.
The organisations that are approved to process the paper application to the Official Receiver include:
The restrictions of a DRO usually last twelve months and are as follows:
Being in prison effectively prevents you from undertaking any of the above and therefore a DRO is something that should be discussed with a debt adviser where you have debts whilst in prison that meet the underlying criteria. By the time you are released from prison you could be in a position where your debts have been cleared and you can embark on a ‘debt free’ fresh start.
After the period of ‘twelve months’ you are discharged from your debts included within the DRO.
You cannot avoid paying Student Loans, Court Fines or indeed Proceeds of Crime payments.
It is interesting to note that there are far more DROs despite their lack of publicity than there are bankruptcies in the UK mainly due to their simplicity and cost-effectiveness.
The GOV.UK link is:
Options for paying off your debts: Debt Relief Orders – GOV.UK (www.gov.uk)
Coming Soon…
