Bankruptcy and debt relief order
Debt Relief Order simply refers to a procedure that is targetedat people who have little or no assets or income and have debts that are below £15,000. There are set criteria for Debt relief order and it includes being unable to repay your debts, not having debts exceeding £20,000, a disposable income that is not more than £50, not having been involved in debt relief order in the past six years, norlt residing in Wales or England, not being currently involved in another formal insolvency agreement, having a total gross assets that does not exceed £1000 in value although you can own a car that does not also exceed that. Debt relief order costs £90 and you have to make the payment to the Official Receiver before your application will be considered and you can only tender your application through a licensed intermediary who can help you in drafting your debt relief order paperwork. Ensure you provide accurate information while applying, if not you run the risk of having your application turned down.
After you apply, your application hets vetted by the official receiver who has the option of accepting or rejecting your application. If your debt relief order gets approved, your creditors will be contacted to notify them. After your application has been accepted, there is usually a moratorium period that lasts for 12 months during which your net surplus isn’t allowed to rise above £50and your debts get written off when the moratorium expires.
This is a good way of dealing with debts you find very difficult to pay. This is a hard decision and should be taken when there is no other option. It makes you free from overwhelming debts and gives you the opportunity to start from the beginning. Once you have been made bankrupt, it is your duty to provide information about yourself to the official receiver and the trustee as well as visit their office when the need arises. You will get discharged from bankruptcy after 12 months if you cooperate with your trustee. There are restrictions that go with bankruptcies such as not being able to act as the director of a limited company and not being able to get a credit of more than £500 without letting people know that you have not been discharged from bankruptcy.
Although the discharge time is 12 months, if you happen to have excess net income, your trustee will request for income contributions for 3 years. It is the duty of the trustee to see if there are families that would be interested in buying your share of the equity and if there were not able to do this, a trustee who has over 3 years from the date of your bankruptcy will get your share of the equity and will also try to get his interest from the property by getting a charge against the property or applying to a court for an order to repossess the property. Bankruptcies and debt relief orders are usually entered in a searchable data base. You might need to speak to a debt relief officer to see if they can help you fill an application to the official receiver and they are expected to only charge a fee meant for the debt relief order application. Debts that can be covered by debt relief orders are known as qualifying debts and during this debt relief order period, creditors are not allowed to request for payment from you and even when they do, you do not have to pay them.
The following debts are covered by debt relief orders: arrears with house rental, overdrafts, credit cards, income tax, telephone bills, hire purchase, debts you owe family and friends, Business debts and if you deceive them into giving such loans to you, you will have to repay them when your debt relief order period ends. The following debts are not covered by debt relief orders social funds loans, student loans, child support, compensation for injury or death etc. I’d you are not sure about the debts covered by debt relief order, you might have to contact a debt relief order adviser who would guide you through the process. They will also help you check if debt relief order is right for you.
DRO stays in your credit record for six years and can affect your ability to get a credit in future. It can also affect your tenancy agreement and you bank might have to close your account with them. DRO can also affect your application for British citizenship and also end your power of attorney over someone’s financial affairs. You should get a specialist so you do not make mistakes.