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Ever since they were first presented to the public in 2007, Debt Relief Orders – usually abbreviated as DRO – have established themselves as a highly effective tool to ward off bankruptcy. There is a very good reason for the popularity of DROs: For decades, the number of private insolvencies has steadily increased in the UK and is now approaching levels which appear outright threatening. Although a bankruptcy is, in a way, the logical conclusion of no longer being able to pay one’s obligations, it is unfortunately also a very destructive measure, depriving the bankrupt of his possessions and making it hard for him to ever apply for a regular loan again. Creditors, on the other hand, will mostly recover only a small part of the money originally owed to them. In the end, both sides loose. A DRO is far more simple and constructive, designed specifically to speed up the excruciating bankruptcy procedure. In short, it may be just what you were looking for. And yet, a Debt Relief Order isn’t for everyone.
Before we answer the question of what exactly a DRO is, let’s have a look at whether or not you qualify for one. Just as with all other alternatives to insolvency, after all, a Debt Relief Order is not just aimed at anyone but at a precisely outlined target group. With a DRO, the idea is to help those with comparatively low debts, little income and next to no assets. To back that up with some numbers, your total debt should not exceed £15,000, your gross assets should be no more than £300 and after subtracting your every-day living expenses, your surplus income should be less than £50 per month. If you own a car, you may mostly still be able to apply for a DRO, but almost by default, the specifications mentioned above rule out home owners. Most importantly, for a DRO to be possible, it has to be established that there really is no way for you to fulfil your financial obligations to your creditors. The latter is to prevent people from carelessly borrowing money and then using a Debt Relief Order as an easy way out.
Once you’ve asserted that you indeed qualify for a Debt Relief Order, let’s now turn towards the essential questions: What is a DRO? And in which way can it be of help in resolving your financial issues?
What is a Debt Relief Order?
Put simply, a DRO constitutes a simplified and improved bankruptcy procedure, intended to spare those with relatively low debts of the hardships of insolvency. As soon as a year after the DRO period has started, your debts may be written off – unless you are actually able to pay them off after all – thereby making you debt-free again. Within this twelve-month moratorium phase, debts included in the Debt Relief Order are frozen, and at the end, your financial situation is evaluated. Thanks to the ease of the procedure, there are several incisive benefits of a Debt Relief Order:
- A DRO is cheaper than bankruptcy. Its costs amount to no more than £90 (non refundable) and even that can be spread out over six months.
- A DRO is less bureaucratic than bankruptcy. There is an easy online form – filled out by „an approved intermediary“ – rather than the piles of paperwork you’ll have to go through in case of an insolvency.
- Lasting a mere twelve months, a DRO is considerably quicker than a bankruptcy, which will typically run for three years.
What is a Debt Settlement Order?
Despite the transparency of these stipulations, there has been some confusion about what a DRO really is over the past few months, mostly because a lot of people were unsure about what constituted the difference between a Debt Relief Order and a Debt Settlement Order. Don’t let the outwardly minute differences between these two terms scare you off – there really is no such thing as a Debt Settlement Order. It simply doesn’t exist. For months some companies sent out thousands of text messages to potential customers, mentioning a Debt Settlement Order which could have their „debt wiped off“ – on his website, software developer James Wiseman received a staggering 960 comments when he addressed the topic in January of this year. As long as you keep these cowboys at bay, however, you can reap the full benefits of a DRO.
Get professional advice on a DRO
And yet, is undeniably essential to turn towards a professional debt adviser, who will be able to realistically assess your financial situation to establish whether a Debt Relief Order is indeed the best option in your particular case and provide you with all the necessary information.
If you’re looking for quick and professional advice on how to apply for a DRO, the Debt Advisory Line is an excellent choice and visit us on http://www.debtadvisoryline.co.uk/.