Debt Relief Order

[Funny Business Cartoons]

Is this a drastic step to take? A DRO may seem daunting as it's really just a step beyond being declared Bankrupt but it might seem an option. Times are harsh and it may seem like a quick fix but is it really worth it?

 

[BizGurl]

One of my sisters had a debt relief order made approx 2 and a half years ago, if I remember correctly. She was struggling with her debts (they totalled around 6 grand, mainly council tax/arrears/etc), and couldn't really find a way out, even with help, and she was in rubbish paid job at the time which didn't help. She offered to pay back her debts at a rate she could afford, but the creditors and council were having none of it, so CAB put her on a £1 a month thing for a while to work through some options....The DRO turned out to be the best for her circumstances...Bearing in mind that she already had CCJs and so would be unable to get credit anyway, doesn't or doesnt intend on working in finance, rents and has no intention of ever buying a house, the DRO has actually made NO impact on her life whatsoever. I don't usually agree with people trying to get out of people paying their debts, but when you make offers and they actually refuse,than why not. It's better than nothing IMO. The only consequence in her situation is that it stopped the debt collectors harassing her and making her life absolutely hell. I would be careful though if you are in business/plan to be in business, as it can make things harder like obtaining credit/opening bank accounts/becoming a director/etc...and you have to tell anyone who may offer credit/do business with you about the DRO...not a good look!

 

[I Love Spreadsheets]

There is a stage before that, that you can use and worked very well for me.

As many of you know I had to take 6 months away from the business to look after a very ill family member. I had a financial buffer of 2 months so this quickly melted away. As a result personal direct debits started to bounce and my bank got p****d off. To be honest First Direct were very good about it, they put me in touch with the Consumer Credit Counselling Service, which is a government run organisation for people in this situation. (If you deal with any other organisation, they will be making money from setting up DROs etc).

They went through my accounts and got me to write standard letters to each of the people I owed money to offering reduced payments. Every bank accepted my offers of reduced payments apart from Santander who are the worlds worst company to deal with.

That gave me enough breathing room to get the business up and running fully again and within 6 months I was back up to full payments.

 

[Furrtiv]

Yes, I recently had to use the CCCS and they were very helpful, I was made redundant and couldn't afford to pay my full loan repayments. The bank didn't really want to listen, even though I made a reasonable offer, so I went ahead and spoke to the CCCS and they helped me sort everything out with template letters, phone calls, etc. I now pay a token amount until I can afford more, the only thing I get is a letter every so often from the bank telling me that I am in arrears, but as they're legally obliged (I think) to do this, it doesn't feel like harassment. Also, that particular bank decided that, after over twenty years of having a shining credit record and various accounts with them, that they'd no longer be doing business with me and closed my account.

To anyone struggling, and I mean really struggling, the CCCS is the best starting place. It seems that banks suddenly sit up and listen when these guys get involved.

The only thing I'm still unsure on is how badly this will affect my credit rating for the future, but as there was no other way out, that at the time was a minor concern.

 

[ashbash]

Have a look at Money Saving Expert forums on bankruptcy and DRO , excellent resource with tons of people in same state and worse all with good advice

 

[I Love Spreadsheets]

I think if you go down the route of getting the people you owe to except token amounts it has less of an impact on your credit scoring than a full DRO. However, as with anything on your credit credit record it is down to the individual companies to interpret what is on your credit file, so some may see as worse than ever.

The alternative is to keep bouncing direct debits and get CCJs which will have a far greater impact on your credit rating.

 

[mcjohn]

Debt relief order seems good at first sight to get out of debt but you must know that it require very sharp eligibility to get into this. Once you enrolled in DRO and there is any slighter improvement in your income or financial circumstances then you will need to pay back your debts in full.