There are a number of options having availability to individuals with financial problems. These options are inclusive of debt management plans, Individual Voluntary Arrangements and bankruptcy. In certain circumstances a further alternative is a Debt Relief Order.
Debt Relief Order in Brief
Debt Relief Orders (DRO) came into being by the government as recently as a means of letting people to apply for personal bankruptcy sans having to go through the full Court bankruptcy procedure. A DRO is a much cheaper option than bankruptcy, although it is restricted in who can apply. Unlike bankruptcy the DRO is approved directly by the governments Insolvency Service. The DRO lasts for up to one year and during that time you are protected outright from action by your creditors to get their money back. Upon completion the debts listed under the DRO will be written off leaving you debt free.
Who can apply for a DRO?
Significant restrictions are around on who can apply for a Debt Relief Order. At first, in order to qualify for a DRO you must have unsecured debts of no more than $15,000. Also, you have to be on a low income, leaving you have a spare available income of $50 or less a month after paying your normal household expenses and have savings of less than $300. In addition, you would be put out if you have a private pension fund or if you own a vehicle worth more than $1000. At the end you ought to have lived in the last three years, had a property or run a business globally.
What types of debt can be included in the DRO?
Only certain types of unsecured debt can be in the inclusion in a DRO. Debts that qualify are inclusive of credit card debts, loans, utility bills, council tax, rent payments and buy now-pay later agreements. Types of debt that cannot be in the inclusion in a DRO consist of child support payments, court fines and student loans.
How do you apply for a DRO?
As usual, you will apply for a DRO in the course of an approved third party or intermediary. This intermediary, usually would be a professional debt adviser who has been given permission to complete the forms and give advice.
Basic Requisitions for DRO
- If he or she is unable to deal with the debts and hence is not able to disburse.
- If he or she is having debt, which is not more than $15,000.
- If the individual applying for the relief than his/her assets must not cross $300.
- If the income is earned very low. The limit is $50, which ought to be calculated after deducting normal household expenses.
- Personal car is permissible, and it must not value more than $1,000 for the purpose of getting considered for the relief.
- An individual who is residing overseas for the last three years is eligible for the application. Furthermore, the business visa holder and residence up to 3 years holders are even permitted to take this relief.
Conclusion
Debt Relief Orders are intended to be a bankruptcy alternative. They are designed for people of limited means. This will make it easier for them to take care of their financial difficulties. Certain qualifications and rules are there to adhere to. So you must ensure you know as much as you can beforehand.