Debt Relief Orders and Bankruptcy Explained
Posted on October 23rd, 2013 at 1:58PM
Debt Relief Order
A debt relief order is an order you can apply for if you can't afford to pay off your debts. It's granted by the Insolvency Service and can only be applied for online through an approved third party, or intermediary. An intermediary is usually a skilled debt adviser who has been given permission to complete the forms and give advice on debt relief orders. The order costs £90 and can provide a fresh start for someone, especially as they will have also been helped to understand how to manage their money going forwards when talking with the intermediary.
A debt relief order usually lasts for a year and during that time, none of the applicant’s creditors will be able to take action against them to get their money back. At the end of the year, the debts listed in the order will be written off.
You can only apply for a debt relief order if you meet certain conditions. These are when:
All debt relief orders are published on the Individual Insolvency Register. The register is available to the public. Names and addresses remain on the register for 15 months. They will also appear on the individual’s credit file for six years.
Bankruptcy is a court order that you can apply for if you are in debt. Someone you owe money to can also apply to make you bankrupt even if you don't want this. It costs £525 to apply for bankruptcy.
Once made bankrupt, an official called the Official Receiver takes control of the individual’s money and property, and deals with their creditors. When the bankruptcy order is over, the individual can make a fresh start and the money owed is usually written off, in many cases, after just one year.
Some advantages of going bankrupt are:
Some of the disadvantages of going bankrupt are:
The bankruptcy record will stay on an individual’s credit reference file for six years.