Everything You Need To Know About Debt Relief Orders
Debt Relief Order (DRO) is the kind of Insolvency which is given to the people who are not able to pay back their debts because they earn very little. Many people end up being listed as bankrupt when there are good alternatives in the form of debt relief. The reason for this is because most people do not know how the Debt Relief order Works. Below are some of the most important things that you need to know about the relief and also what it can do for you.
- Application Process
The reason as to why most people do not opt for the DRO is because they do not know how to apply. The application process is pretty straightforward and not as complicated as most people tend to think it is. The application has to be done through an approved intermediary. The reason for this is that they are the ones who are in a good position to give you the advice that you need to determine if the DRO is the best option for you. After writing your application, they are sent to the government official who takes care of the rest.
The DRO is governed by strict rules and one has to check if they qualify before they can start the application process. The key criteria which are considered are, one must show that they cannot be able to pay their debts. The debt which they owe has to be a certain figure and it must have been approved by official government receiver. The other criteria are you should not own a home and the assets which you own are below a certain figure.
- What DRO covers
The other important thing which you need to know before applying for the DR is what it covers. The debts which are covered in the DRO include any credit card overdraft or loans associated with the cards. The relief covers if you have any arrears in utility bills, council tax, telephone bills or even the income tax. The relief also covers when you have business debts, any pay later agreements or even benefits overpayments. The relief will also cover you if you have any debts from a family member or hire purchase agreements.
- DRO Ineligibility
There are instances which automatically disqualifies one from applying for the debt relief. When the people who you owe money too have applied for bankruptcy and the case has not yet been decided then you cannot be given the tax relief. If you are currently bankrupt or you are already have petitioned for bankruptcy then you will not be considered for the DRO.
- Impacts of the DRO
Before you apply for the DRO you will need to know some of the impacts that it has. The DRO will be recorded on the credit reference file and will remain there for a certain period of time. There will be restrictions which will be placed for a period of 12 months. If you have an active bank account it may be frozen. However, it’s important to seek advice to determine if DRO is the right course of action.