A Debt Relief Order (DRO), as the name suggests, should provide some relief to individuals facing problem debt, by freezing what they owe and allowing them to make repayments without creditors hounding them.
Of course, as a creditor, you are fully entitled to pursue debtors for payment – it’s your money after all – but a DRO represents a commitment to repay what they can afford, at a pace that will ensure the payments keep coming.
It can be a best-compromise solution to recover as much of your money, as quickly as possible, without pushing the debtor into full bankruptcy which could leave you without any repayments at all.
However, figures from the Citizens Advice Bureau show how many debtors are entering into DROs, only to find they are still being chased by creditors.
In many cases, it is the ‘big suppliers’ who are the worst offenders – landlords threatening possession orders over debts already covered by a DRO, and one in four CAB advisors report clients asked to ‘top up’ their energy meters to repay DRO-protected fuel debts.
Among 232 Citizens Advice advisors who handled DRO-related enquiries between August and September 2014, 85% said they had seen some clients who were still being chased for payment.
CAB chief executive Gillian Guy said: “A DRO is a last resort for people in serious money worries. It offers people a chance to get back on their feet and move towards a financially secure future.
Poor practices from creditors have meant that not everyone is feeling the full benefits of this debt remedy; people are still being chased for debts despite having a DRO.
Delays to providing information or continuing to collecting debts that are in a DRO are causing additional financial distress to those in debt.”
There are several implications to take from this – first, if you agree to any kind of debt-related arrangement with your debtors, whether it is a DRO, IVA, or any other formal or informal insolvency arrangement, you should make sure you allow it to work unimpeded by excess hounding or contact.
You should expect to receive instalments when they are due – and of course should take action if those payments do not arrive – but it is a waste of your own time and effort to chase for additional payments after agreeing to a set limit.
On the other hand, if you are just one of several creditors, it is worth remaining vigilant to any such behaviour from your counterparts, as this could endanger the entire arrangement if your debtor feels pushed into making overpayments to one creditor, at the cost of being unable to afford the instalments they owe to others.