What Is A Debt Relief Order?

If you don’t qualify for an Individual Voluntary Arrangement (IVA) or a Debt Management Plan it may be that you do qualify for a Debt Relief Order (DRO).

The Insolvency Service, the government department charged over-seeing the law and regulations in the insolvency industry, issued a consultation paper aimed at finding an alternative to bankruptcy for debtors who can’t afford an Individual Voluntary Arrangement - IVA or a Debt Management Plan.

The consultation paper has been circulated throughout the insolvency industry, so that interested parties could pass comment before its proposals were put before Parliament.


The current progress on Debt Relief Orders in Great Britain is that primary legislation received Royal Assent in July 2007 with some details still to be finalised, namely; the secondary legislation and the processes including the development of the IT infrastructure, but it is expected that Debt Relief Orders will come into force on 6th April 2009.

The basis of the proposal is to find a binding alternative, recognised in law, for a small but specific group of debtors who can’t get debt relief through the channels available now.

It is aimed at debtors who owe up to ￡15,000 of unsecured debt, who do not own property or have assets of ￡300 or less and who have a disposable income after all essential costs of ￡50 or less.

Here are the proposed qualifying criteria that an applicant must meet before a Debt Relief Order can be applied for.

The proposal is aimed helping at the very poorest members of society who are not home owners, who have no realisable assets of more than ￡300, who are typically dependent on state benefits or very low incomes, who are in debt due to a crisis or a life accident, who still wish to pay their debt, but simply cannot.

There will be costs in the new scheme but they will be in the region of ￡100, much cheaper than the cost of a Bankruptcy. The new proposal takes some of its ideas from the current bankruptcy rules but it has been adapted for simplicity and cost efficiency.

The new proposal relies on the debtor applying for the order with the help of a yet to be decided debt advice intermediary.

The debt adviser will prepare and scrutinise each case to ensure that it meets the requirements of the Debt Relief Order and, then submit it to the Official Receiver. He will then issue the Debt Relief Order, side stepping the expensive costs of the court and a judge.

The order will be entered on to the Insolvency Register and credit agencies will be able to use the information for their records.

The order will last for 12 months and, at the end of that time, the debt owed will be discharged leaving the debtor debt free.

The creditors will have rights of redress similar to those for Bankruptcy, if it is found that the application was fraudulent or if the debtor receives a windfall payment.

Debt Management Plan

Are you struggling to pay home loans or credit card? If the answer is yes, you need a debt management plan.

What can a debt management plan do for you?

    * Make a affordable monthly payment for your loans and credit card
    * Reduce or freeze you from interest and charges   
    * Regain control of your finances

Debt management can help you understand debt. It can let you know how easy it is to slide into unmanageable debt. So you don't need worry about your debt any more. It can let you know how to get you out of debt.

So you may ask me what is a debe management plan?

Do you have debts of $1,000 or more? And you can't pay it?

Maybe you don't know how to pay it because you don't have so many money. You pay the money you can afford to the debt management company. And they will pay the money to all your creditors for you. So this can let creditors stop collection action, lower payments and reduce interest.

Sounds well? But don't forget that you should have some income every month, or debt management plan is no use for you.

For more information, contact debt management companies.

 

 

 

Guilt and Debt: How to Take Control of It

Few of us are completely without debt. But if you use debt responsibly, it's not necessarily a bad thing. Unfortunately, it's too easy to let our debts spiral out of control.

Sometimes we end up in debt over our heads through no fault of our own. We may have a good handle on our finances until we lose our jobs or fall ill. Then a reduction in income causes us to fall behind, and we find ourselves using credit to pay for necessities.

Other times, an overabundance of debt is the result of irresponsible spending. We might use credit cards and loans to pay for extravagant wardrobes, luxury vacations and other unnecessary things. Few people do this with the intention of running up balances that they can't repay. Most just don't realize the consequences until it's too late.

No matter how it occurs, getting into debt that we can't afford can really take its toll. We often become depressed about our situation. But most of all, we feel guilty for letting things get so far. If we let it, that guilt can consume us and make us feel worthless.

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