There are several different options you can take if you have debts you are unable to pay back. Depending on your circumstances you could proceed in a variety of ways from getting an Individual Voluntary Agreement. However, everyone’s situation is different and you may find yourself unable to satisfy the criteria required for these actions. If this is the case then you should think about getting a Debt Relief Order, also known as a DRO.
A Debt Relief Order can see you debt free within a year and is often a far cheaper alternative to declaring yourself bankrupt. Debt Relief Orders do not require you to make monthly payments and your debtors will be unable to take any action against you will the plan is in effect.
A Debt Relief Order does have a criteria you need to satisfy which includes, owing less than £15,000, not having more than £50 to spare after living costs, owning less than £300 worth of assets, owning a car worth less than £1000, and finally you must have lived and worked in England for over three years.
If you contact a company for help gaining a Debt Relief Order then they will do any and all negotiating with your creditors as well as give you professional advice on any questions or problems you may have regarding your debt.
A Debt Relief Order costs a one off fee of £90 which is paid to the Debt Insolvency Service. This fee must be paid in full before the Relief Order can be put into effect. As I said earlier, this is much cheaper than bankruptcy which can cost £950 per person. If you are unable to pay the £90 in one go then you can pay it in installments.
Some aspects of a Debt Relief Order you should be aware of includes that it will be on public record for 15 months, will be on your credit record for six years, and you may have difficulty opening a bank account whilst your Relief Order is in effect. You should also know that if your financial situation improves whilst your Relief Order is in effect, you will be expected to pay back your debts.
A Debt Relief Order can be the right move for some but of course it depends on what your personal financial situation is. If you don’t think its right for you then you might consider a Individual Voluntary Arrangement, a Debt Management Plan, or Bankruptcy.