DEBT RELIEF ORDER Meaning and
Definition
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A debt relief order (DRO) refers to a legal and formal insolvency solution available in some jurisdictions that aims to assist individuals with unmanageable debts and limited financial resources. It provides a means to alleviate financial burdens and effectively deal with outstanding debts. A debt relief order usually lasts for a specified period, during which the debtor is protected from creditor actions and is relieved from the responsibility of paying off the debts covered by the order.
This type of order is typically sought by individuals who have accumulated substantial debts, such as credit card bills, loans, or unpaid utility bills, which they are unable to repay. In order to be eligible for a debt relief order, the debtor must meet certain criteria, including having minimal assets, low disposable income, and debts below a specified threshold.
To obtain a debt relief order, the debtor must apply to a relevant insolvency authority or court. If the application is accepted, a supervisor will be appointed to manage the debtor's financial affairs for the duration of the order. During this period, the debtor is required to make regular payments to the supervisor, who will distribute the funds to the creditors as determined by the court. At the end of the specified time, assuming all conditions have been met, the remaining debts covered by the order are typically written off, allowing the debtor to have a fresh start and regain financial stability.
