Debt Relief Orders – Ways out of Bankruptcy

Debt Relief Orders – Ways out of Bankruptcy
In certain conditions of Bankruptcy, you can seek a Debt Relief Order (DRO) to help resolve debt problems. Though it is a helpful solution for certain types of debts, there are various initial criterions that need to be met to become eligible for a Debt Relief Order. Check out the essentials of a Debt Relief Order and how to make it an useful way of resolving your bankruptcy.

What is a DRO?
The debt Relief order is an alternative solution to bankruptcy which an individual can use for certain kinds of debts. The basic eligibility condition to get a DRO is that you should not own a house property. The other conditions include that you should have a very little spare income and also very little chances of any improvement in your financial situation.

Conditions for obtaining a DRO
There are various conditions that are to be satisfied for obtaining a Debt relief Order which includes the primary rule that your debt should not exceed more than £15000 when you apply for your DRO. It is also crucial that you possess an amount less than £50 as spare income after deduction of all essential monthly expenses. The conditions also include that you do not have assets that are more than £300 in worth which does not include motor vehicles that you own. For obtaining a DRO it is also mandatory that you live or own a business or property currently or within the last 3 years in England or Wales. Remember that you can avail the benefits of a DRO only if you have not applied for it in the last six years.
An authorized debt advisor can help you verify whether you satisfy the eligibility criterions and can also guide you in the process of obtaining a DRO.

What debts are normally included in your DRO?
Though you debt is an useful tool for resolving bankruptcy debts, it cannot be used to dissolve all the debts. Debts like court fines, family maintenance payments and student loans cannot be cleared by the Debt Relief order. Organizations like Citizen’s Advice and National Debtline can help in resolving any doubts or clarifications regarding the DRO.
The process of obtaining a DRO
The below is the step by step procedure that you can follow to obtain a debt relief order against your debts.

Step 1: From your local Citizens Advice or National Debtline, get a complete list of all debt advisers who are authorized in your locality.

Step 2: From the list, contact an authorised debt advisor who can help you to send your DRO application to the Official Receiver. The debt adviser will check whether you satisfy the eligibility criterions and will help you complete the application form. Once the form is complete, he sends it to the Official receiver for further processing.

Step 3: A fee of £90 is to be paid as soon as the application form is submitted to the Official Receiver. You can also get help about information on instalment options or local charities dedicate for these purposes.

Step 4: The Official receiver will process your application and will decide upon issuing a DRO. He has the option of issuing a DRO or to reject your application based on his view of the application. He can ask you to provide for more financial information than that is attached with the application before he takes a decision.

In case you application for Debt relief order has been approved, the Official receiver will write to all your creditors stating that they will not be able to take any action against you without the court permission for recovering the money you owe them and will also explain that during the period of the debt relief order, you will not be allowed to make any payments for your debts. In case your DRO application is rejected by the official receiver, you can always seek profession guidance from many organizations like Citizens Advice, National Debtline, etc.

A DRO normally lasts for a period of 12 months at the end of which you will be discharged from all the debts that you had when you filed the debt relief order. In case of any improvement in your financial status during these 12 months, the DRO can be cancelled or amended accordingly.

Effect of DRO on you
Once your DRO application has been approved you will need to follow a set of restrictions usually till the end of your debt relief order term. Your DRO will also be listed on the Insolvency Register and will be maintained for three months after your term completion thus affecting your credit rating till the period.

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