How To Go Bankrupt

What is a Debt Relief Order?

Many in the UK are dealing with the crushing burden of debt. Such is frequently the case when an economy takes a downward spiral. For some, it would seem as if there is no hope but such a bleak assessment is really not accurate. Hope does exist and it can come in the form of a debt relief order.

Of course, this will lead to the most common question: “How do I apply for a debt relief order ?” Prior to answering that question, it is best to define what exactly a debt relief order is.

A debt relief order can be best described as a government initiative that seeks to help debtors avoid formal bankruptcy.

The prime benefit of such an order is that collection action will be ceased for a certain amount of time. This moratorium can last for upwards of 12 months. During this time frame, creditors will not be allowed to enter into any collection action against the debtor. This provides the great peace of mind which can be procured when you do not have to worry about any enforcement action taken when you are mired in debt.

An Official Receiver will oversee this process. If you gain more liquidity or income during the 12 month period, your status might be revoked. There is also the potential to have debt relief extended upwards of three months after the initial 12 month period. This way, you can gain further time in which to work towards an agreement with those whom you are in debt to.

All applications for a debt relief order will go to the Official Receiver who will make all approval or denials on such requests. Once the Official Receiver has made an affirmative determination, a list of your debtors will be compiled. Those on the list will be notified that they cannot contact your for the purpose of engaging in collection action.

To answer the question “How do I apply for a debt relief order?” here is a short overview.

You do not apply for such relief on your own or directly. An “approved intermediary” or a “competent authority” are the individuals you must work with in order to have a debt relief order application processed. These individuals are commonly professionals that work in debt advisory capacities. More accurately, they are accredited professionals that are recognized by legitimate debt advice organisations.

The intermediary serves a valuable purpose. He/she will review the application and then make appropriate determinations regarding whether or not the application is valid and has the potential to be approved.(With certain agencies, there no charge for this service) If all is in order then the application will be forwarded to the Official Receiver where, hopefully, a proper affirmative approval will be made.

It is never easy to deal with the stress associated with being in debt. Thankfully, there are options available to those struggling with debt and a debt relief order can be considered to be among the most helpful and for those struggling with their finances are well advised to explore such options.