The following is a guest post from QuickQuid.
Debt Relief Orders were only introduced as recently as 2009. And yet, they have already firmly established themselves as an efficient alternative to the time-consuming, expensive, complicated and psychologically wearing procedure of a traditional bankruptcy. A Debt Relief Order can be applied for online and is, generally speaking, fairly unbureaucratic. At the same time, not everyone qualifies for a DRO and despite its transparency, it does require the assistance of a professional debt adviser to guide you through the process. Here’s how the procedure works from start to finish.
The UK government have created Debt Relief Orders with a very particular target group in mind, namely debtors with a low income and few assets. The first thing you’ll therefore have to do is to determine whether or not you actually meet these requirements or whether working out a debt settlement, a debt management plan or an Individual Voluntary Agreement (IVA) may be more suitable to your circumstances. Generally speaking, you need to be living in England and Wales and your debts should not exceed £15,000. Your total gross assets should be less than £300 and your surplus income, after subtracting normal living expenses, must not be more than £50 per month.
Once you have determined that you qualify for a Debt Relief Order, contact an approved debt adviser. His task consists in assisting you with filling out the online form to apply for a DRO and to answer all questions you may still have. It is important to note that you can not actually fill out this form yourself – but on the upside, the involvement of a professional expert will also prevent you from making incorrect estimations or errors and thereby considerably speed up the process. And time really is money in this case: The costs for a Debt Relief Order are a mere £90, which represents a considerable improvement compared to a far more expensive bankruptcy procedure.
Once a Debt Relief Order takes hold, all debts included in it will no longer have to be repaid for the duration of one year, which is why it also referred to as a „moratorium period“. This does not apply to all payments, however: You will, for example, still have to pay your rent and utility bills. A Debt Relief Order is certainly no carte blanche for taking on new debt, either, as you will be personally responsible for all debts created while it is in place. If you keep this in mind, however, the prospects are bright: After the moratorium period has elapsed, all debts contained in the DRO will be discharged.
Debt Relief Orders are not suitable for everyone; find an advisor that can provide you with all the information you require about either applying for a Debt Relief Order or providing you with other, useful debt solutions should you not qualify for one.
This infographic brought to you by QuickQuid breaks down consumer debt in the UK. It clearly shows why DRO comes in handy!