Learn about Debt Relief Orders
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Official Receivers grant Debt Relief Orders. Debt Relief Orders are designed to help insolvent individuals to become debt free in about a year.
Debt Relief Orders are designed to provide a simple, low cost alternative to bankruptcy, debt management plans, or an IVA. They are often an attractive option for people with little or no income and few assets. If you are struggling to make ends meet and have debts which prevent you from getting your finances in order, a Debt Relief Order could be the right choice. A Debt Relief Order protects you from creditor harassment, reduces your debts and gives you the time you need to sort out your finances. Qualifying debts included in a DRO will be written off after one year.
A Debt Relief Order can only include certain types of debt. These qualifying debts include:
- Debts from credit cards and loans
- Rent, utility company bills, telephone expense, council tax
- Conditional sale agreements
- Buy now / pay later agreements
Not all debts can be bundled into a Debt Relief Order. Creditors not included in your Debt Relief Order can still pursue collection action against you. These non-qualifying debts include:
- Fines from court orders or confiscation orders
- Child support and maintenance
- Student loans
A Debt Relief Order will cost you £90 but you can pay this in installments over six months.
The term of a Debt Relief Order is one year. After the Debt Relief Order is completed, your debts are eliminated and you're on the road to financial recovery.
- Your debts will be written off after 1 year.
- Your creditors cannot take further action against you without permission from the Court.
- The £90 fee is less than the cost of petitioning for bankruptcy.
Not everyone can apply for a Debt Relief Order. You are only eligible if, after paying your expenses, have £50 or less a month left over.
- You will not be able to get a Debt Relief Order if you have assets worth £300 or more.
- If you've entered into a conditional agreement for the purchase of something, you may be compelled to return the item for credit.
- You will be unable to obtain credit lines over £500 without first informing the lender that you have a Debt Relief Order.
- The Debt Relief Order will stay on your credit record for 6 years.
- If you are a homeowner, you are ineligible.
- Because Debt Relief Orders appear on your credit report, your employment may also be affected.
- Student loans and certain fines cannot be discharged through a Debt Relief Order.
- Banks may refuse to open an account in your name if you have a Debt Relief Order.
If you have lived in, owned a property, or carried on a business in England or Wales in the last 3 years, then you could qualify for a Debt Relief Order. You would be able to get a Debt Relief Order if:
- You owe less than £15,000.
- You do not have an interest in any property.
- You are unable to meet your debt payments and have a monthly surplus income of less than £50.
- Your assets do not exceed £300 (including any pension contributions you make).
- Your vehicle is worth less than £1,000.
You are ineligible for a Debt Relief Order if:
- You have declared bankruptcy in the past or are in the process of becoming bankrupt.
- You have an IVA (Individual Voluntary Arrangement) or are currently applying for one.
- You have had a Debt Relief Order in the past 6 years
- What is a Debt Relief Order?
- What types of Debt can be Included?
- What will a Debt Relief Order cost?
- What are the Advantages of a Debt Relief Order?
- What are the Disadvantages of a Debt Relief Order?
- Who qualifies for a Debt Relief Order?
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