Qualifying for a Debt Relief Order

Qualifying for a Debt Relief Order

Recently the British government created debt relief orders as a new type of bankruptcy. The intent of this creation was to provide another option for those debtors that do not have much income or assets. There are certain criteria that a debtor must meet in order to qualify for a debt relief order.

First and foremost, the debtor must have assets amount to less than 300 pounds. They cannot also be a homeowner. They are able to retain their car so long as it is valued below 1000 pounds. They must make little income, totalling below 50 pounds each month after normal household expenses are subtracted from it. For the debtor to apply, they must find themselves in a situation where they cannot repay their debts. There are also limitations placed upon the amount of debt they may carry. Persons who have more than 15,000 pounds in unsecured debt are not eligible for a debt relief order.

Debtors seeking debt relief orders also must not have other effective debt remedies in the works or occurring soon prior to their seeking a debt relief order. For example, if the debtor seeks a debt relief order they must not have obtained one during the six years before this. Additionally, the debtor cannot be partaking in another remedy when seeking a debt relief order. This would include a bankruptcy, individual voluntary arrangement or other measures. And of course, the debtor must be a resident of the United Kingdom in order to seek a debt relief order.

With the strict qualification criteria, many suggest that the actual number of debtors that can be assisted with a debt relief order is quite small. The original intent of the debt relief order creation was to provide a quick and simple solution to dealing with cumbersome debt. Also, this measure was designed to be less expensive than other options to aid low income groups. Typically, the debtor only pays 90 pounds for the entire process. The debt relief order can be filed without the involvement of the courts, another manner in which this is a cheaper alternative.

Paul Robgher writes for debt-free.org.uk and takes great pride in helping people to be debt free