14 Jul 11 Are you eligible for debt relief order?

A debt relief order is an order which people in the UK, who are not able to pay their debts can apply for. These orders are granted through the Insolvency Service, and will cost consumers less money than filing for bankruptcy. A debt relief order will usually remain open for one year; during that time period, no creditors which you owe money to are able to file any actions against you for non-payment. Once the year is over, the debtor will be relieved of all debts which are listed in the debt relief order.

So, who can apply for a debt relief order, what are the requirements, and how will it help you get out of debt? To be eligible to apply for a debt relief order, an individual must not own anything of value or have savings amounting to more than £300, and if they own a vehicle, it must be valued at below £1000. To apply for a debt relief order, it is required to go through an authorised adviser who sees whether or not you are eligible for the order. It costs £90 which can be paid in installment payments over a period of six months.

So, the basic requirements to apply for the order are: the individual must have qualyfing debts of £15,000 or less; they must have spare income of £50 or less after paying all monthly bills; they must have lived (or have proeprty) for the past three years in England or Wales; and, their assets (and any saving accounts) must be £300 or less. The kinds of debts which are considered qualifying include: credit card debts, loans, rent, utilities, phone bills, hire purchase or conditional sales agreements, or buy now-pay later agreements also qualify.

So if you are eligible for a debt relief order, have hired the authorised adviser, and paid the £90 for the order, the one year period which you are not liable to your creditors for non-payments will start up. This is a great opportunity if you are facing financial hardships, and contemplating filing for bankruptcy. It is a cheaper process, and will not harm your personal credit rating in the way that a bankruptcy proceeding will damage your credit.