Mini-Bankruptcy

I have had a few people asking me lately about a mini-bankruptcy, which I assume they are referring to a Debt Relief Order or DRO.

A DRO is a newish form of insolvency for people who have debts that are less than 15K, have no real assets, and no surplus of income after their expenditures to offer towards the debts.  Debt Relief Orders were introduced in 2009 as another form of insolvency, and bridge a gap for many people who need to go bankrupt, but may not have the means to do so, as bankruptcy fees are now £700 per person, and don’t have over 15K of debt.

I call it a light-bankruptcy, or bankruptcy-lite, but many refer to it as a mini-bankruptcy. However A DRO, just the same as being bankrupt, or even in an IVA, is a form of insolvency, and you are listed on the insolvency register.  Even an IVA, which is a way to repay your debts in a manner you can afford, is a form of insolvency.

And of course a DRO does impact/affect your credit, just as an IVA and bankruptcy does.

So in looking at options with your debts, a DRO is another tool that can be used to get out of debt; of course there are those with debt that exceeds 15K, or with property, so they may need to explore other options such as an IVA, debt management plan, or in some instances bankruptcy.