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Debt Solicitors
What is a Debt Relief Order (DRO)? (23 August 2010)
Date: 23/08/2010
Debt Relief Orders came into force in England and Wales on 6th April 2009 and they provide debt relief, subject to some restrictions. They are suitable for people who do not own their own home, have little surplus income and assets and less than £15,000 of debt.
An order lasts for 12 months. In that time creditors named on the order cannot take any action to recover their money without permission from the court. At the end of the period, if your circumstances have not changed you will be freed from the debts, which were included in your order. DROs do not involve the courts. They are run by The Insolvency Service in partnership with skilled debt advisers, called approved intermediaries.
Debt Relief Orders and Overpayment Recovery
On Monday the 26th July 2010, a judge in the Administrative Court ruled on Judicial Review that the Secretary of State does not have the right to recover overpayments of Social Security benefits and Social Fund loans by making deductions from an ongoing award of benefit when the debtor is subject to a Debt Relief Order (DRO).
On 12 August 2010 and after I wrote about the judgement! The Court of Appeal granted DWP a stay of the judgment. DWP are therefore continuing, in existing cases, to recover overpayments by deductions from benefit where the overpayments have been included in a DRO. Also, DWP will not, for the time being, be making refunds of benefits already deducted in such cases.
Local authorities (LAs) will therefore need to decide whether they wish, in light of the stay, to continue recovery of overpayments that have been included in a DRO, by deductions from ongoing HB, CTB or any prescribed DWP benefits, or whether to commence or recommence recovery by this method in these cases.
Given the economic climate, however, it is highly likely the LAs will not miss an opportunity to make good their bad debts.
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