Creditor objections to a debt relief order

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) 

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

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]

• revoke or amend the DRO[13]  

• apply to court for directions[14]

• take other steps including applying for a debt relief restrictions order[15]

• do nothing  

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.

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:

• giving the official receiver directions[22]

• making an order inquiring into the debtor’s dealings and property[23]

• extending the moratorium period[24]