IPA Putting Better Regulation into Practice

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1 Revised Versin April 2009 IPA Putting Better Regulatin int Practice Dealing with Debt A Basic Guide t Alternative Ways f Reslving Debt Prblems If yu have debt prblems, there are a number f pssible alternatives that can help yu t manage them. This Guide explains what the alternatives are, hw they wrk and sme f the prs and cns f each f them. It can be used by individuals with either cnsumer r business debts, r a cmbinatin f bth. This Guide is nt a definitive explanatin f the law. Nr is it a substitute fr taking independent advice frm an inslvency practitiner r recgnised advice rganisatin n which f the alternatives is apprpriate fr yu and yur circumstances. Yu shuld seek advice early: the wrst thing yu can d when yu are in financial difficulty is t d nthing and hpe the prblem will g away. This guide: Summarises the key features f each f the main alternative ways f dealing with debt Prvides an utline f hw each f them wrks Explains the prs and cns f each alternative Key differences between the alternatives Each f these alternatives can have different utcmes and affect yu in different ways. Yu need t be aware f this when cnsidering which alternative is likely t be apprpriate fr yu. The mst imprtant pints t cnsider are: Des the prcedure release yu (excuse yu) frm all r part f yur debts s that yur creditrs will have n further claim against yu? Is it binding n all yur creditrs? Are yu prtected frm further recvery actin and/r additinal charges by yur creditrs during the prcedure? Hw lng will it last? Will it affect yur emplyment? Will yur hme be at risk? Sme f these prcedures invlve the payment f a fee: where a fee is payable, it may either cme ut f payments yu make twards yur debts r it can be payable separately befre r after the prcedure is put in place: yu shuld be tld what the fee will be befre agreeing t prceed. Sme f these prcedures may invlve priritising certain types f unsecured debt, fr example rent, cuncil tax and gas, electricity and water: it will be mre difficult t negtiate reduced payments r write-ffs fr these kinds f debts. Mst prcedures exclude fr example fines, student lans and maintenance payments which yu will still have t pay. Are yu cnfident that yu can keep up the payments yu will have t make twards yur debts fr the perid f time required under the alternative yu are cnsidering? The mst apprpriate alternative in each case will depend n yur wn and yur family s present circumstances and future prspects, and n yur wn preferences. In all cases the key factrs are the amunts yu we and hw much yu are able t repay frm yur incme and/r yur assets, after meeting yur wn and yur family s essential needs. Yu shuld be ready t give full details abut all yur debts and yur finances t whever yu seek advice frm, and t yur creditrs. It is essential yu give them the cmplete picture. In making any ffer t yur creditrs yu shuld be realistic abut yur incme and reasnable abut yur expenditure inslvency practitiners and recgnised advice rganisatins are able t prvide yu with guidance abut levels f essential husehld and persnal expenditure which can be used t put yur case t yur creditrs. 1

2 Features cmmn t all the alternatives It is imprtant t understand that: Nne f these alternatives can affect the rights f secured creditrs, fr example a bank r building sciety that has a mrtgage r legal charge ver yur hme. They cntinue t have the right t take pssessin f yur hme if yu d nt keep up yur payments. Mst debts invlving credit and lans, fr example credit and stre cards and bank verdrafts, are unsecured - that is t say failure t pay this type f debt des nt autmatically entitle the creditr t take smething f yurs, such as yur hme. Hwever in sme circumstances they may g t curt if yu fall behind with yur payments and btain a curt judgment; and they may then be able t ask the curt t secure the debt n yur hme thrugh what is termed a charging rder. All these alternatives may affect yur credit rating and will shw up n yur credit recrd. Entering int a prcedure t help with yur debt may, in a few cases, affect yur emplyment; and it may, under the terms f yur emplyment, have t be disclsed t yur emplyer. If yur circumstances change during the time yu are subject t ne f the prcedures, whether fr the better r wrse, yu will be required t disclse the change which may affect what yu are paying twards yur debts. The Tables at pages 3-10 cntain first the key features and then the detailed Prs and Cns fr each alternative. Nte als It may be pssible in sme circumstances t btain help frm a charity r trust fund t meet certain types f urgent r pressing debt but is unlikely t be the answer t the whle prblem - charities are generally nt able t help with large credit card and similar debts. Yu will nrmally have t fill in a detailed applicatin frm r find a recgnised advice rganisatin t apply fr yu. If - yu d nt wn yur hme r have any savings r ther assets; and - yu d nt have any surplus incme after meeting yur and yur family s essential needs; and - yur circumstances are unlikely t imprve in the freseeable future because f fr example lng term ill health limiting yur ability t wrk r hw much yu can earn yur creditrs may be prepared t agree t write ff the whle f what yu we them that is, release yu frm having t pay them. A recgnised advice rganisatin may be able t assist yu in explaining yur circumstances t yur creditrs and asking them t release yu. Fr Further Infrmatin: The Inslvency Service - the gvernment agency respnsible fr the administratin f the inslvency system, which includes bankruptcy, in England and Wales - maintains a website with access t a cmprehensive range f publicatins n all types f inslvency prcedure. It als prvides a searchable database f inslvency practitiners. The Inslvency Service cannt prvide legal r financial advice n individual cases but can prvide further infrmatin abut the alternatives listed here and surces f further advice which can be fund at: Helpline: Opening hurs: Mnday - Friday 9am t 5pm (except Bank Hlidays) Website: Inslvency Practitiners Assciatin Valiant Huse 4-10 Heneage Lane Lndn EC3A 5DQ The IPA is a prfessinal bdy recgnised by the Secretary f State fr Business, Enterprise & Regulatry Refrm under the Inslvency Act 1986 fr the purpses f authrising and regulating inslvency practitiners 2

3 Disclaimer: This Guide prvides general infrmatin nly. Every effrt has been made t ensure that the infrmatin is accurate, but it is nt a full and authritative statement f the law and yu shuld nt rely n it as such. The IPA cannt accept any respnsibility fr any errrs r missins as a result f negligence r therwise. 3

4 Key features f each alternative Infrmally Negtiated Agreement with creditrs Credit Rerganisatin/ Cnslidatin Lan Debt Management Plan (DMP) Autmatic debt release N N N Autmatically binding n unsecured creditrs Autmatic prtectin frm unsecured creditr actin Prtectin frm secured creditrs actin Length f time Effect n emplyment Hme at risk Minimum r maximum amunt wed Type f unsecured debt allwed Credit rating affected N N Only n creditrs paid in full Only frm creditrs paid in full N, but may agree t be bund by plan if yu keep up yur payments N, but may agree t be bund by plan if yu keep up yur payments Cunty Curt Administratin Order (CCAO) N, unless the curt makes an rder t that effect Yes, n creditrs listed in rder Yes, n creditrs listed in rder Individual Vluntary Arrangement (IVA) Yes, when yu have cmpleted the terms f the IVA Yes, if accepted by creditrs wed mre than 75% f yur unsecured debts wh vte n yur prpsal Bankruptcy Yes, when yu are discharged, subject t certain exceptins as belw Yes Debt Relief Order (DRO) Yes, when yu are discharged, subject t certain exceptins as belw Yes Yes Yes Yes N N N N N N See belw N fixed time N fixed time N fixed time Prbably nne N, but yu need t keep up yur mrtgage/rent payments N Any Until last payment made Usually up t 5 years Usually ne year but yu may be required t make payments frm yur incme fr 3 years Usually ne year Prbably nne Prbably nne Prbably nne Pssibly Pssibly Pssibly N, unless a secured lan is taken ut N Any N, but yu need t keep up yur mrtgage/rent payments Nne, but it is unlikely that a DMP wuld be practical if yur debts are less than 5,000 Any, but in practice debts excluded in bankruptcy are usually excluded frm DMPs N, but need t keep up yur mrtgage/rent payments Anything up t 5,000 Any Can be avided if yu are able t raise an amunt equal t yur share f the net wrth f yur hme, fr example by remrtgage r lan frm a relative Nne, but it is unlikely that an IVA wuld be practical if yur debts are less than 15,000 Any, but in practice debts excluded in bankruptcy are usually excluded frm IVAs May be avided if fr example yur spuse r partner r a relative is able t pay an amunt equal t yur share f the net wrth f yur hme N minimum if yur wn petitin ( 750 if petitin is by a creditr) Any with certain exceptins e.g. fines, student lans and maintenance payments Grss assets must nt exceed 300, s yu will nt qualify fr a debt relief rder if yu wn yur hme even if yur mrtgage exceeds its value Anything up t 15,000 Any with certain exceptins e.g. fines, student lans and maintenance payments Prbably Pssibly Yes Yes Yes Yes Yes 4

5 Infrmally Negtiated Agreement with Creditrs Hw it wrks An infrmally negtiated agreement can be set up quickly withut frmalities, and may invlve: (1) Payments frm yur incme and/r (2) Payments frm lump sums yu receive fr example frm an inheritance r frm relatives Creditrs may be prepared, at the start r later, t agree t write ff part f what yu we them: any agreement t d s shuld be cnfirmed in writing. (1) Payments frm incme: Yu need t wrk ut hw much yu can affrd t repay, after allwing fr yur essential husehld and persnal expenditure such as mrtgage/rent, heating and lighting, water, telephne, husekeeping, etc. Yu shuld ffer t share this surplus incme amng yur creditrs, based n the amunts yu we them. This means that all yur creditrs are ffered their share f what yu can affrd. Yu shuld als ask that any interest r charges are frzen. Creditrs will expect yu t prvide them with regular updates f yur incme and expenditure s that they can see whether yu are able t increase yur payments. (2) Payments frm lump sums: Yu may make payments twards yur debts frm a lump sum which yu receive and which yur creditrs may agree t accept in settlement f what yu we that is, they agree t write ff the balance they are wed. If hwever yu d have surplus incme, then they may expect yu als t make at least sme payments frm that surplus incme. If yur inability t make payments is temprary, as a result fr example f a shrt term illness, creditrs may agree t accept n payments r nly tken payments f say 1 a mnth, but nly fr a limited perid. Prs Cns Yu can make an ffer t yur creditrs and negtiate agreement t accept payment by instalments yurself; but yu may find it helpful t have sme assistance frm a recgnised advice rganisatin in drawing up yur budget and drafting letters t yur creditrs. Creditrs may be prepared t freeze interest and charges fr a perid r all tgether, prviding yu keep up regular payments t them. Yu can ask if yu can reduce yur payments if yur situatin gets wrse r yu face unexpected essential expenditure. Creditrs may be prepared t write ff the balance f what yu we after a perid f time if yu have shwn that yu have made every effrt t pay them back as much as yu can and have kept up regular payments t them. Yu shuld be able t cntinue any business yu may have r self-emplyment; but yu need t be careful abut running up new debts which yu cannt meet alngside repayments t yur existing creditrs. Creditrs may refuse yur ffer (but it is always wrthwhile asking them t recnsider) r any prpsed reductin in payments, althugh they cannt refuse whatever payments yu are able t make t them. In particular, creditrs may refuse unless yur ffer is made thrugh a recgnised advice rganisatin which will have independently reviewed yur circumstances. Yu can cmplain t the Office f Fair Trading if this happens. Creditrs may refuse t freeze interest r charges (again, it is wrthwhile asking them t recnsider). S, if yu can nly affrd small payments, these may nt be enugh even t cver interest r charges, and yur debts will increase. There is n debt frgiveness, s yu remain liable fr yur debts until they are paid in full, althugh yu may be able t persuade yur creditrs t agree t write ff part f the debt depending upn yur circumstances. Creditrs can still take actin against yu, fr example by btaining a curt judgment and then an rder which creates a charge n yur hme, unless they have specifically agreed nt t d s in return fr yur keeping up regular payments. Yu are respnsible fr administering all the payments yurself and keeping creditrs infrmed f yur circumstances. 5

6 Debt Rerganisatin/Cnslidatin Lan Hw it wrks Yu can apply t a lender fr a lan t clear yur debts, which are ften marketed as cnslidatin lans, by which yu swap sme r all f yur creditrs fr just ne creditr. If yu wn yur hme, the lender is likely t want t have a charge n it: yu shuld seek independent advice as t whether this wuld be in yur best interests. Yu shuld shp arund fr the best deal frm high street and internet lenders. If yu have a pr credit rating, lans n the best terms may nt be available t yu. A cnslidatin lan will nly be f help if - it is used t pay sme r all f yur existing debts; and repayments ttal n mre than thse yu are already making twards yur existing debts, and yu can affrd t make them. Otherwise, the new lan will simply add t yur debt burden and make yur prblems wrse. Yu will als need t lk very carefully at hw lng the lan will take t repay; what interest yu are ging t have t pay cmpared with what yu are currently charged; and what charges r penalties there are, fr example fr late payments. Prs Cns While yu may be assisted in getting a cnslidatin lan, yu will be respnsible fr paying yur existing debts frm it and negtiating with any f yur existing creditrs wh are nt repaid in full. Yu make a single payment each week r mnth n the cnslidatin lan, rather than a number f payments t different creditrs (unless any f yur existing creditrs have nt been repaid in full). Yur mnthly payments may be lwer, r at least shuld nt be any higher. Yu shuld be able t cntinue any business yu may have r self-emplyment; but yu shuld be careful abut running up new debts. Yu can expect t have t pay fees in cnnectin with the arrangement f the lan: always ask fr full details in writing f what thse fees will be. If yu have a pr credit rating yu may nt be able t get a lan r yu may be ffered pr terms and cnditins, fr example at a high rate f interest. If the lan is secured n yur huse r ther asset, then it culd be repssessed if yu d nt keep up the payments. Interest rates ften change ver the lan perid, making it difficult t wrk ut what the ttal cst f the lan will be: check if the interest is fixed r variable. Cnslidatin lans are ften ffered ver a lnger time than yur existing credit card/ stre card/verdraft/lan repayment perids. That means that even if the interest appears reasnable, the length f time yu have t repay can significantly increase the verall cst f the lan and yu end up paying mre. If yu dn t clear all yur existing debts, then the new lan is likely t make yur debt prblems wrse, and yu may find it mre difficult t make all the repayments t which yu are cmmitted. Creditrs wh are nt paid in full can still take actin against yu, fr example by btaining a curt judgment and then an rder which creates a charge n yur hme. 6

7 Debt Management Plan (DMP) Hw it wrks If yu have surplus incme after meeting yur essential husehld and persnal expenditure, such as yur mrtgage/rent, lighting and heating, water, telephne, husekeeping, etc, and yu wuld like smene t negtiate with yur creditrs and manage yur payments t them, then yu might cnsider a mre frmal debt management plan. Creditrs will als want details f yur assets, including yur hme where yu wn it, s that they can cnsider whether yur ffer is reasnable r whether they expect any f thse assets t be sld s that they will receive a larger payment twards their debt. The individual r cmpany yu chse t manage yur plan is required t be licensed and regulated under cnsumer credit legislatin. Sme will nt charge yu a direct fee fr their services but instead receive it frm yur creditrs, fr example ut f the payments made t yur creditrs. Others may make an initial charge fr preparing, negtiating and administering yur plan and then take the remainder as a prprtin f yur mnthly payments. In either case, befre yu sign up, yu shuld be prvided with details f the fees it is prpsed t charge fr managing yur plan and hw they are t be paid. A plan can last fr 5 years r mre depending n what yu we and hw much yu can pay each week r mnth: yur debt management cmpany shuld give yu an estimate f hw lng the plan will last. Creditrs will expect t be prvided with regular updates f yur incme and expenditure s they can see whether yu are able t increase yur payments. Sme debt management cmpanies may nt be prepared t accept yu fr a plan if yu we less than 5,000 r yur surplus incme is less than 100 a mnth since it wuld nt be ecnmic fr them t undertake the wrk invlved. Prs The debt management cmpany will assist yu in preparing yur plan, including agreeing the level f yur expenditure based n guidelines which are acceptable t creditrs. The debt management cmpany will negtiate with creditrs n yur behalf, including freezing interest and charges: yur plan is mre likely t be accepted than if yu try yurself t negtiate separately with each f yur creditrs. Sme debt management cmpanies d nt charge yu a fee. Yu make a single payment each week r mnth t the debt management cmpany which is respnsible fr administering payments t yur creditrs. Yu can ask if yu can reduce yur payments if yur situatin gets wrse r yu face unexpected essential expenditure. Creditrs may be prepared t write ff the balance f what yu we after a perid f time if yu have shwn that yu have made every effrt t pay them back as much as yu can and have kept up regular payments t the debt management cmpany. Yu shuld be able t cntinue any business yu may have r self-emplyment; but yu need t be careful abut running up new debts which yu cannt meet alngside repayments t yur existing creditrs. Cns Creditrs cannt be frced t accept yur plan r freeze interest and charges. A plan is nt binding n creditrs wh refuse t take part in it althugh they cannt refuse t accept whatever payments yu can make t them. Creditrs may be prepared t accept a reductin in payments fr nly a limited perid. If yur situatin imprves, yu can be expected t be asked t increase yur payments. There is n debt frgiveness, s yu remain liable fr yur debts until they are paid in full, althugh yu may be able t persuade yur creditrs t agree t write ff part f yur debt depending upn yur circumstances. Creditrs can still take actin against yu, fr example by btaining a curt judgment and then an rder which creates a charge n yur hme, unless they have specifically agreed nt t d s in return fr yur keeping up regular payments. A plan can last fr a number f years. If interest and charges cannt be frzen fr the full length f the plan, then the ttal amunt yu end up paying under the plan culd substantially exceed the riginal amunt f yur debts, and extend the lifetime f the plan. 7

8 Cunty Curt Administratin Order (CCAO) Hw it wrks If yu we nt mre than 5,000 t at least tw creditrs and have a curt judgment entered against yu by ne f yur creditrs which yu are unable t pay in full, yu can ask the curt t make an administratin rder. Under that rder, yu are required t make weekly r mnthly payments frm yur incme t the curt which distributes them t yur creditrs in prprtin t the amunts yu we them. The curt may, if there are difficulties in btaining payments frm yu, make an attachment f earnings rder which is sent t yur emplyer directing that amunts be deducted frm yur wages and paid t the curt fr distributing t yur creditrs. On cmpletin f the terms f the curt s rder, any amunts still wed t yur creditrs is written ff. Prs Cns Yu can prepare yur wn applicatin, althugh a recgnised advice rganisatin r the curt may be able t assist yu where needed. Creditrs will be ntified by the curt. Nne f the creditrs listed in yur applicatin can take further actin against yu withut the curt s permissin. Interest and charges are stpped. There is n up-frnt fee the curt takes 10p in every 1 yu pay in. Yu make a single payment each week r mnth t the curt which is respnsible fr administering payments t yur creditrs. Yu can ask the curt if yu can reduce yur payments if yur situatin gets wrse r yu face unexpected essential expenditure. Yu can apply t make payments fr a timelimited perid such as three years using a cmpsitin rder, and any amunts still wed t yur creditrs wuld then be written ff. Yu shuld be able t cntinue any business yu may have r self-emplyment; but yu need t be careful abut running up new debts which yu cannt meet alngside repayments t yur existing creditrs. Creditrs can make bjectins t the curt and ask t be left ut f the rder (althugh the curt may nt agree t this). If yu d nt keep up yur payments the rder can be revked; yu may be made subject t the same restrictins as if yu were bankrupt; and the creditrs can pursue yu again. If the curt makes an attachment f earnings rder, yur emplyer will becme aware f yur financial difficulties. If yur situatin imprves, yu can be expected t be asked t increase yur payments. 8

9 Individual Vluntary Arrangement (IVA) Hw it wrks If yu have surplus incme after meeting yur essential husehld and persnal expenditure, such as yur mrtgage/rent, lighting and heating, water, telephne, husekeeping, etc, and/r have assets which can be used t pay yur creditrs and/r have access t a lump sum frm fr example a relative, then yu might cnsider entering int an individual vluntary arrangement which will prtect yu frm actin fr recvery that might be taken by yur unsecured creditrs and will usually invlve creditrs writing ff part f what yu we them. A prpsal fr an IVA has t be apprved by creditrs wed mre than 75% f yur debt and wh vte n whether t apprve it r nt. The individual yu chse t supervise yur IVA is required t be licensed and regulated under inslvency legislatin as an inslvency practitiner. The inslvency practitiner will charge fees fr preparing, negtiating and administering yur IVA: yu shuld be prvided with details f the fees it is prpsed t charge and hw they are t be paid whether as a lump sum r frm the payments yu make int the IVA befre yu are asked t sign up t an IVA. Sme inslvency practitiners may nt be prepared t accept appintment t supervise yur IVA if yu we less than 15,000 since it wuld nt be ecnmic fr them t undertake the wrk invlved. Prs The inslvency practitiner will assist yu in preparing yur prpsal, including agreeing the level f yur expenditure based n guidelines acceptable t creditrs, and submit it t yur creditrs. Creditrs wh vte against yur prpsal are still bund by it if it is accepted by thse wed mre than 75% f yur debts. Creditrs wh are unsecured cannt take any further actin against yu. Many inslvency practitiners will allw their fees fr preparing yur prpsal t be paid n a mnthly basis as part f yur IVA. Yu make a single payment each mnth r quarter t the inslvency practitiner wh is respnsible fr administering all payments t yur creditrs. Yu can ask if yu can reduce yur payments if yur situatin gets wrse r yu face unexpected essential expenditure. The terms f an IVA will usually enable yu r yur spuse r partner r a relative t make arrangements, fr example a re-mrtgage r lan, t purchase yur share f the net wrth f yur hme r t make additinal payments, rather than yur hme having t be sld. On cmpletin f the IVA, the balance f what yu we t yur creditrs is written ff. Cns Yur IVA is entered n a public register. The inslvency practitiner may require payment in advance fr preparing yur prpsal and getting agreement f yur creditrs. If there is sme equity (value) in yur hme after taking accunt f the mrtgage(s) n it, yu are likely t be required t pay fr yur share, usually in the fifth year f yur IVA, by remrtgaging it: if yu cannt btain a remrtgage, yu may be required t cntinue making mnthly r quarterly payments frm yur incme fr up t a further year. Creditrs may nt be prepared t agree t yu reducing yur payments where yur situatin gets wrse, r may agree but nly fr a shrt perid. If yur situatin imprves, then yu can be expected t be asked t increase yur payments. If yur fail t keep up yur payments r t cmply with ther terms f the IVA, the IVA is likely t fail and yu may be made bankrupt. Yu wuld usually be able t cntinue any business yu may have r self-emplyment; but yu need t be careful abut running up new debts which yu cannt meet alngside repayments t yur existing creditrs and t deal prperly and prmptly with yur tax affairs which may be a cnditin f creditrs agreement t an IVA. 9

10 Bankruptcy Hw it wrks Bankruptcy is a frmal curt prcedure which yu can start r which can be started by ne f yur creditrs wed nt less than 750. Yur assets (with certain exceptins) are sld twards paying yur creditrs: yu retain necessary persnal effects, cntents f yur hme and tls f trade (which may include yur car) unless they are f high value in which case they will be replaced by nes f reasnable cst: yu will be required t make payments ut f yur incme fr up t three years if yu have surplus incme after meeting yur essential husehld and persnal expenditure, such as yur mrtgage/rent, lighting and heating, water, telephne, husekeeping, etc. Yur assets and incme are dealt with by a licensed and regulated inslvency practitiner r by a gvernment fficial called the fficial receiver. Bankruptcy usually lasts fr ne year: n yur discharge frm yur bankruptcy, yu are released frm yur debts (with certain exceptins). Prs Cns Yu can prepare yur wn applicatin, althugh a recgnised advice rganisatin r the curt may be able t assist yu where needed. Creditrs are ntified by the fficial receiver. Creditrs wh are unsecured cannt take further actin against yu. It may be pssible t avid the sale f yur hme if yur spuse, partner r a relative is able t arrange t buy yur share f its net wrth. The balance f what yu we yur creditrs, after yur assets have been realised and yu have cmpleted making any payments required frm yur incme, is written ff, with certain exceptins explained ppsite. It allws yu t make a fresh start, usually after a year. Yur bankruptcy is entered n a public register and may be advertised. If yu apply fr yur wn bankruptcy yu will have t find a curt fee and depsit ttalling 510. Yu will remain liable fr certain debts - in particular student lans, fines, maintenance payments and under ther rders made in family prceedings. Any business yu have will almst certainly be clsed dwn. Yu can cntinue in self-emplyment, subject t restrictins abut fr example btaining credit. Any emplyment may be affected. Certain prfessinals are barred frm practising if they are made bankrupt. Yu cmmit an ffence if yu incur credit f 500 r mre withut disclsing that yu are bankrupt. Yu cannt act as a directr f a cmpany r be invlved in its management unless the curt agrees. Yu may have a bankruptcy restrictins rder made against yu fr a perid f 2 t 15 years if yu are fund t have acted irrespnsibly, recklessly r dishnestly. 10

11 Debt Relief Order (intrduced April 2009) Hw it wrks If - yur ttal assets are wrth nt mre than 300 excluding necessary persnal effects, cntents f yur hme and tls f trade tgether with a mtr car wrth nt mre than 1,000; yur debts d nt exceed 15,000; and yur surplus incme, after meeting yur essential husehld and persnal expenses, such as yur rent, lighting and heating, water, telephne, husekeeping, etc, des nt exceed 50 a mnth then yu can apply t a gvernment fficial called the fficial receiver fr a debt relief rder thrugh an apprved intermediary. The fficial receiver may nt grant yur applicatin if yu have given away any f yur assets r sld any assets at less than their value. A DRO lasts fr ne year when yu are released frm yur debts (with certain exceptins). Prs Cns An apprved intermediary will assist yu in preparing yur applicatin. Creditrs are ntified by the fficial receiver. Creditrs wh are unsecured cannt take any further actin against yu. Yur debts are written ff, with certain exceptins explained ppsite. It allws yu t make a fresh start, usually after a year. Yur DRO is entered n a public register. Yu will have t find a fee f 90 paid t the fficial receiver Yu will remain liable fr certain debts - in particular student lans, fines, maintenance payments and under ther rders made in family prceedings. Yu can cntinue in self-emplyment, subject t restrictins abut fr example btaining credit. Any emplyment may be affected. Yu cmmit an ffence if yu incur credit f 500 r mre withut disclsing that yu are subject t a DRO. Yu cannt act as a directr f a cmpany r be invlved in its management unless the curt agrees. Yu may have a DRO restrictins rder made against yu fr a perid f 2 t 15 years if yu acted irrespnsibly, recklessly r dishnestly. End Nte: This Guide prvides general infrmatin nly. Every effrt has been made t ensure that the infrmatin is accurate, but it is nt a full and authritative statement f the law and yu shuld nt rely n it as such. The IPA cannt accept any respnsibility fr any errrs r missins as a result f negligence r therwise. 11