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IVA

Debt Relief Order Explained

Debt Relief Order is for people with very low or no disposable income available to make payments to creditors therefore not allowing them to enter in to a debt management programme, IVA, Trust Deed, or even make the required payment to enter in to Bankruptcy.

If a person wishes to make an application for a Debt Relief Order it must be done through a qualified debt adviser who will ensure the applicant does not meet the requirements for Debt Management, IVA, Trust Deeds or cannot afford the fee for entering in to bankruptcy

The application will be reviewed by the Official Receiver, it is important to make sure all the facts are correct as civil or criminal proceedings may be taken against the applicant if the process is abused.

If a person has more than £50 each month available after essential household expenditure they would not be eligible for a Debt Relief Order as it is considered that they would be able to meet the minimum payments for other types of debt relief.

Criteria Required for Debt Relief Order

To be able to apply for a Debt Relief Order you must satisfy all the below.

You must be resident in England or Wales
You must not be able to make your repayments
Your debts must be below £15,000
You must have a disposable income of £50 after paying essential household bills
You must not be involved in any other formal debt arrangement
Your assets must be less than £300 including equity in your home

If your circumstances do not change for the better within the allocated twelve month period you will not be required to make any payments to your creditors and the debts will be cleared.

Debt Relief Order Disadvantages

The Order will be on public records for a period of fifteen months.
The information will be on your credit record for a period of six years.
You will not be allowed to obtain credit of £500 or more without informing the lender that you are in a Debt Relief Order.
You may not change your trading name unless you notify all the people you deal with that you are involved in a Debt Relief Order.
If you want to be involved with a limited company or become a director you must first obtain permission from the courts.
If you acted irresponsibly by increasing debts when you knew you could not possibly pay them or are deemed dishonest you may be subjected to a Debt Relief Restrictions Order, this will stay on a credit record for fifteen years.
If you have a disposable income of £100 or more and your debts are below £15,000 a Debt Management Programme may be a suitable solution.
If you have Debts of more than £15,000 you may qualify for an IVA writing off up to 70% of your debts

If you would like to apply for a Debt Relief Order contact your local Citizens Advice Bureau.

 

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