What’s a Debt Relief Order?
The Debt Relief Order is intended for those facing debt problems without many significant assets. That is, for those who don’t own their home or have the material resources to supplement their earnings. In order to qualify for a Debt Relief Order, an individual must have a total combined debt amounting to less than £15,000. For those that match these criteria, the DRO could be an ideal solution; potentially freeing you from debt within a year and allowing you to avoid the more severe debt solutions on the market, like IVAs and bankruptcy.
The extent of your debt problem is not dependent on the amount that you owe. It’s a question of your ability to service the debt and maintain the repayments. The Debt Relief Order, as we’ve said, is pitched at those who aren’t homeowners. However, it’s also a debt solution that could provide the most manageable route out of debt for anyone who finds that they have under £50 left after paying their monthly bills. Your debts, which must amount to less than £15,000, can include any unsecured loans, credit card debt and your overdraft facility. Excluding you car, which can be worth up to £1000 but including your pension, your assets can’t be worth more than £300 in total.
The DRO term is usually a year and in that time your creditors will not be able to chase you for any payment or take any further legal action against you. However, you’re going to find it very difficult to obtain any credit. Considering your situation, this may be a good thing but if you do apply for any credit of over £500, you are legally bound to inform them of your DRO. It remains on your credit report for 6 years after successful completion of the terms.
Debt Relief Orders must be granted by the Official Receiver and if you come into some money while you’re under the terms of the DRO, you are obliged to let them know. If you break this or any other rules of your DRO, the Official Receiver will implement a Debt Relief Restriction Order, extending the restriction period to 15 years.
A Debt Relief Order can only be issued to individuals in debt who have been referred by an authority that is recognised and approved by the Insolvency Service. Debtsolver will be able to give you more information about the organisations that are authorised to make Debt Relief Order referrals; there are six of them. Providing it’s the right debt solution for you, your dedicated debt advisor will take you through all stages of the process and help you to complete the necessary paperwork for the Official Receiver. This is after you have talked to them about your situation and come to a decision on which solution is best for someone in your financial circumstances.
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