Bankruptcy vs. Debt Relief Order

Bankruptcy though frees you from your debts instantaneously is a serious issue and leaves a long lasting impact on you credit history and future debt taking capacity. It also imposes various rules and regulations and failure to adhere leads to criminal prosecution at times.
If you are in debt problems and is looking for a financial relief, then read on to understand about this other alternative available which can ease your debts without passing through the strenuous hold of bankruptcy.

DRO
The alternative option is DRO or Debt Relief Order which was introduced in April 2009. This is another solution which individuals who cannot afford the £450 fee for bankruptcy can resort to. The DRO is meant as a resort for people who live on a meagre monthly pay and cannot afford to pay the debts.

Eligibility for DRO & Bankruptcy
Qualifying for the DRO is stricter than the bankruptcy process and has many criterions. The first eligibility is the possession of debts in amounts excess of £15000 with the condition that your total assets exceed not more than £300. This first eligibility makes home owners not eligible for availing the benefits of DRO as their home value is also taken into consideration as an asset. The second eligibility states that you will be earning a very low and insignificant amount as wages every month. The amount can be as low as £50 or even less. The above eligibilities restate the fact the DRO is meant specifically for people who cannot afford to pay their debts at any case.
Bankruptcy on the contrast requires the debtor to owe around £750 to his creditors before he can file bankruptcy. The filing of bankruptcy also requires the debtor to pay about £450 to the bank. Individuals do not have any restriction on the assets possessed for filing bankruptcy as compared to the £300 less assets in the debt relief order. The monthly wage also is not restricted for filing bankruptcy and in certain cases excess monthly salary helps payment towards debt reduction.

How to apply
You can apply for the DRO only through one way which is through the service organizations like Citizen Advice Bureau, etc. It is these organizations which decide whether you qualify for the debt relief order based on details provided in your application form. Once applied and accepted eligible, the form passes to the official receiver. The official receiver will then review your application and verify again for the details. If all terms and details are acceptable, the official receiver can issue a debt relief order (DRO) without the court intervention. In case the details provided are wrong and it comes to the official receiver’s notice, he can revoke your DRO anytime and also prohibit you from re-applying for the next 6 years.
Bankruptcy can be applied by submitted your bankruptcy form, required documents and filing fee in the local bankruptcy court. Once the form is submitted, the bankruptcy clerk performs the first check on the details while the judge does the second. Once approved, the court appoints an official receiver to preside over your case and he takes instantaneous responsibilities over your debts.

Features of the DRO & Bankruptcy
The debt relief order is more like a insolvency except for strict rules and is meant for a different set of audiences. But the feature of public display remains the same. The details of the DRO are displayed publically on the Insolvency service website with all relevant details including name and address. The website is a public database which anyone can access.

Criticism
The introduction of the DRO policy has been met with lots of criticism which states that this new solution has made bankruptcy an easy option for many people. This solution has also been met with appreciation as it is a genuine help for many trying to avoid bankruptcy.

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