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Debt relief orders (DRO's) were introduced in April 09 to help people on very low incomes resolve their debt problems. So far over 4000 people have made use of this new legislation. Introduced into English law in April 2009, debt relief orders are designed to help people which serious unsecured debt problems who cannot afford to declare bankruptcy. One of the issues of the bankruptcy process is that it involves the courts. If a debt relief order is used, there is no need to attend court. This reduces the cost of the process from over £500 to less than £100. Once a DRO is authorised by the official receiver, all of the person's debts are taken away from them. They will normally not be asked to pay anything towards the debt as they cannot afford to do so. Generally after 12 months, the order will be lifted and any outstanding debt written off. Not everyone is eligible There are a number of strict criteria that you have to meet before you are eligible to carry out a debt relief order. This is because the orders are aimed at helping people who are surviving on very little money each month and therefore cannot afford to use debt management solutions such as bankruptcy, individual voluntary arrangement or a debt management plan. You must be insolvent - You can only take advantage of a debt relief order if you truly cannot afford to repay your debt. This means that if you have any assets, these must be worth less than your total unsecured debts. In addition the money you have available each month to repay your debt must be less than the agreed minimum monthly payments. Debt must be below £15,000 - DRO's can only be used to deal with unsecured debts. Mortgage or secured loan debts cannot be included. The total of your unsecured debts (credit cards, catalogue debt, pay day loans, doors stop loans) must not be more than £15,000. Some unsecured debts cannot be included in a debt relief order. These include Student Loans Company loans, court fines and of course any secured debts. Surplus income must be less than £50 - The amount of money you have left each month after all reasonable household expenses is called surplus or disposable income. To be eligible for a debt relief order, your surplus income must be less than £50 per month. Total assets no more than £300 - You will not be allowed to carry out a debt relief order if the total value of any assets you own is more than £300. There are some items excluded from this figure such as clothing, bedding, furniture, household equipment and other basic items

that you and your family need in the home. You may also have a car worth up to £1000. If you are struggling with debt which you cannot afford to pay, but feel just cannot afford to make any monthly payments or pay for the cost of bankruptcy, than a debt relief order could be the perfect solution for you. There is no need to attend court and the process can normally be completed relatively swiftly. However, as with all debt solutions, before making a decision to apply for a debt relief order you should learn about all of the different options available. The most important thing is to choose the debt management option which is right for you and will resolve your debt problem once and for all.

Steve Jackson is a debt adviser from in the UK. For more quality and unbiased information on Personal Debt Solutions, visit our website at

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