Alternatives to bankruptcy

Debt Relief Orders

A Debt Relief Order (DRO) provides relief from debt (subject to some exceptions).

A DRO lasts for 12 months, during which creditors named in it cannot take any action to recover their money without permission from the court. At the end of the 12 months you will, provided your circumstances have not changed, be freed from all debts included in your DRO. DROs do not involve the courts. They are made under a partnership between the Insolvency Service and skilled debt advisers, called approved intermediaries, who will help you apply to the Insolvency Service for a DRO.

An informal arrangement or 'family arrangement'

If you know that you cannot pay all your debts, you could consider writing to your individual creditors to see if you can reach some compromise. Include a timetable of when you will repay them. The disadvantage with an informal arrangement is that it is not legally binding so your creditors could ignore it later and ask you to pay in full. Your local Citizens Advice Bureau can advise and help you make this kind of arrangement.

Individual voluntary arrangements

This is a formal version of the arrangement described above. An individual voluntary arrangement begins with a formal proposal to your creditors to pay part or all of your debts. There is a requirement for an insolvency practitioners' report to the High Court so you will need the help of an insolvency practitioner. Any agreement reached with your creditors will be binding on them.

Administration orders

If one or more of your creditors has obtained a judgment against you, the Enforcement of Judgements Office (EJO) may make an administration order.

Under this Order you will make regular payments to the EJO to pay towards what you owe your creditors. Your total debts must not be more than £5,000 and you will need enough regular income to make weekly or monthly repayments. You do not have to pay a fee for an administration order but the EJO will take a small percentage from the money you pay towards its costs. If you do not pay regularly, the order could be cancelled and you may become subject to the same restrictions as someone who is bankrupt. If your circumstances change and you cannot pay as ordered, you can apply to the EJO to change the order. The EJO will tell you what to do. Further information on this procedure can be obtained from:

Enforcement of Judgements Office
23 - 27 Oxford Street
Belfast
BT1 3LA

Further information

For more information regarding the above alternatives please view our guide Alternatives to bankruptcy.