PART 4

March 2010

INVESTIGATION INTO THE DEBTOR’S AFFAIRS AND THE REVOCATION AND AMENDMENT OF A DRO

46.58 Objections by creditors

Any person specified in a debt relief order as a creditor (see paragraph 46.51)  to whom a specified qualifying debt is owed may object to: -

• The making of the order
• The inclusion of the debt in the list of the debtor’s qualifying debts; or
• The details of the debt specified in the order [note 1] [note 2].

Such an objection must be made within the moratorium period (see paragraph 46.74), within 28 days of the date on which the creditor was informed of the making of the DRO [note 3], based on prescribed grounds (see paragraph 45.59) and supported by documents [note 4] [note 5].

 

46.59 Grounds under which a creditor may object to the making of a DRO

Any objections  to a DRO must state one or more of the following grounds upon which the creditor relies (see paragraph 45.59), the applicable grounds being as follows [note 6]:

• That there is an error in, or omission from, something specified in the debt relief order.
• That a bankruptcy order has been made in respect of the debtor.
• That the debtor has made a proposal for an IVA.
• That the debtor’s income surplus was over £50 per month (see paragraph 46.31).
• That the value of the debtor’s property was over £300 (see paragraph 46.23).
• That the debts specified in the order were not qualifying debts (see paragraph 46.9).
• That one or more of the conditions outlined at paragraph 46.5 were not met.
• That the debtor has entered into a transaction at an undervalue or preference.
• That the debtor’s surplus monthly income has increased beyond the prescribed level after the order was made (see paragraph 46.31).
• That the total value of the debtor’s property has exceed the prescribed level (see paragraph 46.23) after the order was made.

 

46.60 Effect of an objection

On receipt of a correctly formatted objection, the official receiver may open an investigation into the relevant affairs of the debtor, to arrive at a decision (see paragraph 46.62) [note 7] [note 8].  See paragraph 46.63 for information on the extent of the official receiver’s investigation and powers of investigation.

If, following an objection, the official receiver is minded to amend or revoke the DRO (see paragraph 46.65), he/she is required to give the debtor 21 days to respond to the objection, and must consider the debtor’s observations before making the final decision [note 9].  This is achieved by the issue of two letters, the first providing 14 days to respond and if no response is received a further letter is issued providing a further seven days.

 

46.61 Official receiver to carry out investigation on his/her own initiative

Whether or not the official receiver has received an objection from a creditor (see paragraph 46.58), he/she may open an investigation into the relevant affairs of the debtor, to arrive at a decision (see paragraph 46.62) [note 10].  See paragraph 46.63 for information on the extent of the official receiver’s investigation and powers of investigation.

 

46.62 Decision to be reached following investigation

The decisions to which an investigation by the official receiver may be directed are [note 11]:

• Whether the DRO should be revoked or amended (see paragraph 46.65).
• Whether an application should be made to court under its general power to review a DRO (see paragraph 46.73).
• Whether any steps should be taken in relation to the debtor (such as application for DRRO – see paragraph 46.94).

 

46.63 Powers of investigation and duties of the debtor

The debtor has a general duty to co-operate with the official receiver.  He/she also has a duty to inform the official receiver of any error or omission in his/her application, or any change in his/her circumstances that would affect (or would have affected) the determination of the DRO (see Part 3) [note 12].

Additionally, the official receiver may require any person to give him/her such information and assistance as he/she may reasonably require in connection with an investigation [note 13].

The debtor has a duty to inform the official receiver of any changes (including errors or omissions in the application form) that would affect (or would have affected) the decision to grant a DRO [note 14].

Such duties can be enforced through the courts (see paragraph 46.70) [note 15]

 

46.64 Enforcement of duty to co-operate with official receiver

On the application of the official receiver, the court may summon to appear before it [note 16] to give information regarding the dealings, affairs and property of the debtor the following [note 17]:

• The debtor him/herself;
• The debtor’s spouse or former spouse or civil partner or former civil partne
• Any person appearing to the court to be able to give information or assistance concerning the debtor’s affairs.

Where a person fails to comply with such summons, a warrant may be issued for their arrest [note 18].

 

46.65 Power of official receiver to revoke or amend a DRO

The official receiver has the power to revoke or amend a DRO, whether or not there has been an objection from a creditor (see paragraph 46.58), or an investigation (see paragraph 46.61) [note 19].

The order may be amended for the purpose of correcting an error or omission in anything specified in the order [note 20] (but not to add creditors [note 21]).

 

46.66 Grounds under which the official receiver may revoke or amend a DRO

The grounds under which the official receiver may revoke or amend a DRO (see paragraph 46.65) are as follows [note 22]:

• That information supplied by the debtor (in his/her application (see Part 2), or subsequently) was incomplete, incorrect or misleading.
• That the debtor has failed in his/her duty to co-operate (see paragraph 46.63).
• That a bankruptcy order has been made against the debtor.
• The debtor has made a proposal for an IVA (see Chapter 20).
• That the debts of the debtor were not qualifying debts (see paragraph 46.9).
• That the debtor did or does not meet all the eligibility criteria (see Part 1).

 

46.67 Service of notice for revocation of a DRO

Where the official receiver takes the decision to revoke a DRO (see paragraph 46.65), he/she must send notice (see paragraph 46.68) of the decision to revoke to the debtor and to any creditor listed in the DRO [note 23]. The notice can be sent by post or e-mail, depending on the delivery method that appears to best suit the debtor. 

 

46.68 Notice of revocation

The notice of the decision to revoke (see paragraph 46.65) must identify the debtor and date and reference number of the DRO.  In addition, the notice of the decision to revoke must state the reasons for revocation and specify the date from which the revocation has effect [note 24].

 

46.69 Service of notice of amendment of DRO

Where the official receiver takes the decision to amend (see paragraph 46.65) a DRO, he/she must send notice (see paragraph 46.68) of the decision to amend the order to the debtor and to any creditor listed in the DRO [note 25].

 

46.70 Notice of amendment

The notice of the decision to amend (see paragraph 46.65) must identify the debtor and the date and reference number of the DRO. In addition, the notice must specify the amendment, the date on which the amendment was made and state the reasons for the amendment [note 26].

 

46.71 Amendment of entry on IIR following revocation or amendment of DRO

Where the official receiver takes the decision to revoke or amend a DRO, the IIR must be updated to reflect this [note 27] [note 28] [note 29].

 

46.72 Date of revocation

Where the official receiver decides to revoke the order he/she may revoke it either [note 30]-

• With immediate effect, or
• With effect from such date (not more than three months from the date of the decision) as he/she may specify (to, for example, allow the debtor time to enter into an arrangement with his/her creditors [note 31]).

If the official receiver has decided to revoke the order from a specified date, he/she may change that decision and, instead, revoke it with immediate effect [note 32].

 

46.73 Powers of court in relation to DROs

The court has a general power to review any decision made by the official receiver in dealing with a DRO application [note 33] [note 34], and may quash the whole or any part of that decision [note 35].  The official receiver may apply for directions in relation to any matter arising in connection with a DRO, or an application for a DRO [note 36].

Where, for example, the debtor has failed to co-operate (see paragraph 46.63) the court may extend the moratorium period [note 37] [note 38] (see paragraph 46.79) or make an order revoking the DRO [note 39].

 

[Back to Part 3 – Considering the debtor’s application and the making of a DRO] [On to Part 5 – Effect of a DRO]