Most of us have struggled with debt repayments from time to time. But there comes a point when struggling can transition to drowning. And when it happens, the metaphor could not be more appropriate.
If you’ve reached the point where the phone ringing or the arrival of the mail man causes a sinking feeling of panic and dread in the pit of your stomach, it’s time to take action. The good news is that you are certainly not alone – people are struggling with debt every day, and for every problem in life, there are professionals who make a living out of delivering solutions. This website provides a case in point – you will see a variety of debt management solutions ranging from negotiating reduced payments to filing for bankruptcy – and various other options that fall in between.
The point is that whatever your circumstances, there is a solution available. Choosing the most appropriate one depends on a number of factors including the amount of secured and unsecured debt you have, the nature and value of your assets, your monthly income and your average outgoings. This is why you really need to sit down with an expert, but here, we will take a look at an option that can be perfect if you have debts of more than £20,000 and very few assets.
About debt relief orders
We live in the 21st century, and as far as debt is concerned, commonsense and pragmatism rule. If you haven’t got it, you can’t pay it, and no amount of badgering or threats is going to change that – in fact, all they will achieve is costs and inconvenience for the person doing the badgering.
A debt relief order takes this logic to its natural conclusion. It is filed by a financial professional on your behalf, and essentially it says this person has overwhelming debt, has no means to pay it and no saleable assets. The order is submitted to an official receiver, and when granted, the unsecured loans are frozen for 12 months.
During this period, the creditors may not contact you or pursue you, and the first thing you will notice is a sense of peace and calm. After 12 months have elapsed, your financial position is reassessed and if it is unchanged, the debts are written off, gone forever.
What’s the downside?
You are probably wondering what is the catch. There isn’t one as such, but the eligibility criteria are quite strict. Your assets must be worth no more than £1,000 and you need to demonstrate that you really can’t pay. Proving a negative is sometimes a challenge, but debt management specialists know how to go about it.
You will also find that you are persona non grata from a creditworthiness perspective while the order is in place, as it will show on your credit file – however for most people in this position, their credit rating is already through the floor – and at least you know that when it is all over, you will be able to start with a clean sheet.