There comes a time when debt begins to get overwhelming and you just cannot continue to pay all of your bills.
A debt relief order was put in place to help people who are in debt, but not overwhelmingly so. It offers them an opportunity to relieve the pressure of creditors harassing them and hopefully get them back on track financially.
A debt relief order, or a DRO, is available to people who have little disposable income (£50 per month) and less than £15,000 in total debt.
While they can own a vehicle, the worth of the vehicle cannot exceed £1,000. In addition, their total assets must be valued at less than £300.
Applicants must also be a resident of Wales or England. There are exceptions to the residency clause for those who have worked or lived in those areas at some point over the previous three years.
Anyone filing for a DRO must not have had a DRO within the last six years. Nor are they allowed to have any litigation revolving around their insolvency ongoing at the time of filing.
There are also stipulations as to what debt is allowed to be included in the DRO.
For example, debt such as student loans, secured debt, and magistrate fines are not permitted.
The person filing for the DRO will have a 12-month period in which to rectify their finances. During this grace period, creditors are not permitted to contact the individual unless that contact has been approved by the courts.
If after the 12-month period the individual’s finances have not improved, the debt will more than likely be dismissed by the courts.
While nobody likes to admit they cannot pay their bills, there comes a time when a debt load can just simply become too much. Instead of burying oneself deeper in debt, a DRO is in place to help them out of a dire situation.
However, since an individual cannot file again for six years, this should serve as a lesson learned and educate them on what they need to avoid so this does not happen again.