Creditor objections to a debt relief order
A creditor can object to a debt relief order, but only on certain grounds and only if they follow the correct process.
What a creditor can object to
A debt relief order (DRO) prevents creditors of qualifying debts from taking enforcement action against the debtor during the moratorium. A creditor might object because they do not agree with the making of the DRO or the inclusion of their debt.
Under the Insolvency Act 1986, a creditor whose debt has been included in a debt relief order can object to the:[1]
making of the DRO
inclusion of their debt as a qualifying debt
details of the debt specified in the DRO
Grounds for a creditor's objection
The creditor must base their objection on a prescribed ground.[2] Prescribed grounds for objecting include:[3]
an error in the information provided in the DRO
information missing from the DRO
the debts listed in the DRO were not qualifying debts
the debtor did not meet the qualifying conditions for a DRO[4]
the debtor made a preference or transaction at undervalue within the 2 years prior to the application[5]
Existing insolvency
The creditor can object to a DRO if:[6]
a bankruptcy order has been made in relation to the debtor
the debtor has made a proposal for an Individual Voluntary Arrangement (IVA)
How a creditor makes an objection
An objection must be made in writing and within 30 days of the notice of the DRO being delivered to the creditor.[7]
The creditor's objection must contain the:[8]
name and address of the creditor
name of the debtor and the reference number of the DRO
matters the creditor objects to
ground(s) for objection the creditor is relying on
facts the creditor is relying on
information and documents in support of the grounds and the facts the creditor is relying on
After a creditor has raised an objection
The Official Receiver has a duty to consider an objection that is made in the correct form[9] The Official Receiver might carry out an investigation to make a decision about how to proceed.[10]
An investigation could be carried out at any time, including after the end of the moratorium.[11]
Following an investigation, the Official Receiver could:[12]
Debtor's response to the objection
The Official Receiver must send full details of the creditor's objection to the debtor if they are minded to amend or revoke the DRO.[16]
The debtor can send their comments on the objection to the Official Receiver within 21 days of delivery. This gives the debtor the opportunity to explain why the DRO should not be revoked or amended.
The Official Receiver must consider the debtor’s comments before they make a final decision, provided they are received within 21 days.
Debtor's application to court
A debtor can apply to court to challenge the Official Receiver's decision to amend or revoke the DRO.[17]
The court can quash a decision of the Official Receiver and give them directions to reconsider any matters relating to this decision.[18]
The debtor can try to resolve the matter directly with the Official Receiver before applying to court. The court might order the debtor to pay costs if their application has no merit.
Creditor's application to court
The creditor can apply to court if they are not satisfied with the Official Receiver’s decision to take no action following an objection.[19]
The court can make an order to revoke or amend the DRO during the moratorium.[20] The court can revoke the DRO at any time including after the moratorium has ended.[21]
Other options available to the court include:
Last updated: 24 May 2022