Ever stuck in a cash crunch and then opted for a debt from risky sources? Well, paying them too is a huge task. If you’ve asked for help, you might have heard the term debt relief somewhere. It refers to dismissing debts that you can’t pay because of various reasons best known to you. UniQuote assists you in finding the best schemes that will help you pay some debt amount to lessen the financial burden.

The process isn’t that complicated as it sounds. You basically select a refinancing option to topple the existing loan to reduce financial risks. To begin with, your authentic documents are required to know about the assets that you own, which tests your eligibility. If you are admissible, the amount is processed swiftly, which is adjusted for lower interest rates.

What is debt relief? How to apply for a debt relief?

Explaining Debt Relief

In simple words, debt relief is waving off your debt, either some part or full, which makes it simple for the borrower to pay it. The options might include lowering the interest rate, mixing numerous debts into one lower interest loan. This process helps the borrower to reduce the financial burden.

What is the Debt Relief Order (DRO)?

A DRO or debt relief order is a process wherein all your debts are reduced if your debt is relatively low and has a few assets at hand. You’ll go through a procedure that will identify your eligibility. If you are eligible, a DRO team will be assigned to you to apply to the Insolvency Service on your behalf. Keep in kind that Scotland residents can’t opt for this procedure.

Going a bit deep in the process, a DRO starts its wonders by freezing your debt payments and interests for a year. Your financial condition will be scrutinized, and if it doesn’t change in the span of 12 months, all your debts will be written off. We are perfectly capable of helping you apply for a DRO, given that you qualify.

What is the process to apply for a DRO?

The first step will gauge if you are eligible for a DRO. That doesn’t take much time. Once an expert confirms that you qualify, we move on to the next step. The forms will be sent to you, and a team will assist you in applying for a DRO. Complete the form and give it back to the team. In the next step, the DRO team will solidify your application. A £90 fee is mandatory to be paid to the Insolvency Service, but if you live in Wales or England, you can pay it in installments. After receiving the payment confirmation, your application will be submitted.

How long does the process take?

After you have submitted all the required documents, along with the £90 fee, the agent will submit your application to the Insolvency Service. They’ll take up to 10 working days to process your application. Your hands are tied here since the decision is up to them.

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What debts are included and excluded in a Debt Relief Order

Debts such as utility bills, credit cards, store bills, council tax, etc. are covered in a DRO. If you forget to mention a debt while applying for a DRO, it won’t be added after the DRO commences; you’ll have to bear the expenses yourself. Moreover, your existing debt could be annulled if it took over the permitted limit. But, before getting into the technicalities, the following are the debts approved in a DRO:

  • Utility bills such as electricity, gas, rent, council, and telephone tax.
  • Benefit overpayments (not the fraudulent kind).
  • Consumer debts such as overdrafts, credit card bills, store cards, payday loans, etc.
  • Conditional sale agreements, or better known as Hire purchase (HP).
  • Things bought on buy-now-pay-later schemes.
  • Loans provided by family and or friends.

In the moratorium period (the 12 months of a DRO), you are not required to make any payments to the debts mentioned above. But certain debts aren’t included in a DRO. They are:

  • Child maintenance.
  • Criminal fines.
  • TV license debts.
  • Loans from the DWP Social Fund (budgeting loans, etc.)
  • Fraudulent debts.

What are the advantages and disadvantages of opting for a DRO?

To give you an initial idea of what DRO does, here are a few benefits and risks of a DRO. A DRO is considered to be a cheap alternative to bankruptcy. The latter term seems harsher, but a DRO tries to pull debtors to go that way. No payments need to be made for 12 months. They’ll be written off after the said period. Moreover, the creditors can’t pressurize you to pay the debts in these 12 months. Keep in mind that DRO is still a form of debt solution, but there is no need for you to appear in the court.

Coming to the disadvantages or risks of a DRO, it is only available for those who owe less than £20,000 or $26,000. Moreover, it’s only available for people living in England, Northern Ireland, or Wales. You’ll be required to pay a non-refundable fee of £90 for the Insolvency Service, which will be a one-time payment. If you’ve opted for a DRO, it will reflect on your credit report in a negative light. Homeowners will have to pass on this procedure since they can’t apply for a DRO.

The situation after a DRO

The DRO will cease to exits after a year, or 12 months since the day it was passed. In this period, known as a moratorium, you shouldn’t make any payments toward your debts that are included in your DRO. Moreover, the creditors won’t chase you to pressurize you to pay the debts. After the moratorium period ends, all your debts included in your DRO will be written off – if your situation doesn’t improve. Keep in mind that you won’t be notified that your DRO has ended, so you’ll need to keep a tab on the dates.

After your DRO ends, the creditors can’t take any action against you to recover their money since your debts will be written off. Take note that you won’t be protected on new debts that you take after your DRO ends.

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Will DRO reflect on my records?

For those living in England and Wales, your DRO is stored on the Individual Insolvency Register. It keeps the information about IVAs (Individual Voluntary Arrangement), DROs, and bankruptcies. Its data entries are available online so, when your DRO is approved, that information will become a part of the database. All the details regarding your DRO will be on that database and will remain there even after three months the DRO ends. So, that means your information will be available for 15 months. For the residents of Northern Island, all your information will be a part of the public DRO register. It doesn’t matter if your DRO is completed or canceled; all the information will be removed after three months when the DRO ends.

Can I apply for a debt relief order again?

Yes, you can apply for a DRO again. Keep in mind that you’ll have to wait for a period of six years from the date your first DRO ended. You could apply again if your last DRO were canceled, even if it was approved.

Why opt for Uniquote to get Debt Relief?

We at UniQuote help you to reduce your debt by consulting the right creditors. We also take matters such as loan forgiveness or bankruptcy into consideration. Your financial condition will be scrutinized but to carve a path for you. After this is done, we’ll set up a free consultation to determine your eligibility.

You’ll need to make some monthly deposits to prove your authenticity. Once this step is done, we’ll have a word with the creditors to convince them to reduce your loan. Now you can sleep well knowing you’ll only be paying the loan with lower interest rates.

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