Dealing With a Debt Relief Order in England & Wales
Debt relief orders can be a much simpler, faster and cheaper option to bankruptcy than in the UK, which actually came into force in England & Wales on 6 April 2021, and are now available in Northern Ireland. When considering which debt relief method is right for you and your needs, it is important to consider all aspects and weigh up all options. These methods can range from completely avoiding any contact with your creditors to a more hands-off approach where you deal with the creditors when you have money and make payments only when you have money. Your debt relief method will ultimately depend on how much you owe and whether or not you have enough savings to settle the debt you owe, or if you will need to rely on credit to continue making payments. Some debts may be better suited to a particular method of debt relief.
The most commonly used method of debt relief order in the UK is that in which you avoid making any contact with your creditors. Depending on what type of debt relief order you enter into, this could mean that you will be required to make an initial repayment of up to three to twelve months, depending on the amount you owe. During this time, you cannot make any new applications for loans or credit cards. However, if you still have sufficient funds after making the initial payment, you can then start to pay off the rest of your debt over this period of time.
This type of debt relief order in England & Wales differs from that in the US and Canada in that there is no requirement for a written declaration from your creditors. This means that you can avoid making a statement and instead simply notify your creditors of your intent to enter into a settlement arrangement. This enables you to avoid entering into any commitments with your creditors (such as entering into a bankruptcy procedure) and prevents any embarrassing or awkward questions being asked by your creditors during this time. You may find that all your creditors agree to enter into a settlement agreement, saving them from having to go to court in order to pursue you for the money that you owe. While you cannot predict how long you will qualify for one of these orders, you should try to keep your debt to less than half of your total monthly income, which will qualify you for a speedy debt relief order in England & Wales.
Another way in which you can qualify for this type of debt relief order in England & Wales is that if you have had a gap of twelve months without any monthly earnings. It will take around twelve months for any debts that you have not paid fully to be included in this type of order. This is because your debts would only be eligible for a debt relief order in England & Wales if your income had remained constant throughout the year. If your income had changed, this would also have to come through the courts and would need to come to the attention of a debt adviser who would determine whether or not you qualified for the benefit of a debt relief order.
A debt relief order in England & Wales allows you to get the bills and arrears that you have accumulated written off, making it easier for you to make payments towards any debts that you have. With this type of debt solution, you will not be able to reach the stage of bankruptcy. You will, instead, only have to enter into an agreement with your creditors whereby they will agree to write off part of the amount that you owe. In order to do this, it will be necessary for you to provide proof that you have a sufficient income. This means proving that you are capable of paying a decent amount of money each month and you will not be considered to be relying on your income alone to keep up your repayments on your debts.
A debt relief order in England & Wales works by allowing the creditors to write off a large proportion of the total amount that you owe. For example, you may have a huge bill to clear but the creditors will only be able to write off a percentage of this. The proportion that you are left with to pay will be determined by an order that the courts have made. The actual amount that you have left to pay will vary, depending on the value of the assets that you have at stake. If the worth of your assets is less than the amount that you owe, your creditors will have to decide whether they are willing to write off more of the total or whether they think that they can recover anything from the assets that are left.
Your debt relief order in England & Wales will be recorded on a credit report, which shows that you have an outstanding debt. This means that any further debts that you take on will also be shown on the credit report, proving that you have an ongoing problem with your repayments. It will also reflect negatively on your credit rating, meaning that any forms of credit that you obtain will come with very high interest rates. However, it will also mean that you have an outstanding obligation to your creditors and that if you fail to pay money on time, your creditors will be forced to seek legal proceedings against you. Your credit rating reflects the reputation that you have as a borrower and so if you are unable to meet your obligations, this could seriously damage your reputation.