A little-known method has emerged to help borrowers struggling to repay bills, offering a way to wipe out all of their debt. Cherieda Maw, 55, found herself owing almost £30,000 after her husband passed away, leaving her feeling hopeless and alone. Unable to afford payments and constantly bombarded by calls, letters, and bailiffs, Cherieda discovered a debt relief order (DRO) as a solution. The DRO froze her debts for 12 months, during which time creditors were not allowed to contact her or ask for payments. If her financial situation did not improve after 12 months, her debts were completely wiped.
Overwhelmed by Debt
After her husband's death in 2014, Cherieda, who has a disability preventing her from working, found that her debts quickly spiraled out of control. Despite receiving benefits, bills came in rapidly, leading her to seek an Individual Voluntary Arrangement (IVA) to manage her finances. However, the steep fees charged by debt management companies for IVA forced Cherieda into a difficult position. Unable to afford the payments, her plan was canceled, leaving her back in the same situation with relentless creditors.
A Little-Known Solution
Cherieda discovered Money Wellness, an organization offering free debt advice, and learned about debt relief orders. After consulting with an adviser who assessed her financial situation, Cherieda paid a £90 fee to set up the DRO. The approval lifted the weight off her shoulders, relieving her from the stress and worry caused by the overwhelming debt. Cherieda urges others in a similar situation to seek help from organizations like Money Wellness, as there is no need to pay for debt advice when there are charities and government-backed organizations available.
What is a Debt Relief Order?
A debt relief order freezes debt for 12 months, during which creditors cannot contact you. If your financial situation does not improve after this period, the debt is wiped off. To qualify for a DRO, you must owe less than £30,000, not own a home or any other property, have £75 or less left over each month, and not have savings or a single possession worth more than £2,000. You cannot have an IVA or be going through bankruptcy, and you can only go through one DRO every six years.
Seeking Help
If you find yourself struggling with debt, there are several charities and organizations that offer free help and guidance. Some of these organizations include Citizens Advice, StepChange, and National Debtline. If debt is affecting your mental health, charities such as Mind and Samaritans are also available to talk to. It is always best to seek free, independent advice to find the best solution for your individual needs.
Debt Relief Orders can be a great solution for individuals with debts under £30,000 who are struggling to repay and have limited funds after paying bills and essential living costs. Discussing options with a debt adviser is vital to explore if a DRO is the right choice for you. The DRO carries a £90 fee initially, without any monthly payments, making it an alternative for those whose payments in debt management plans or IVAs are too high. The key is to consult a reliable debt adviser like National Debtline or Citizens Advice.
According to Money Wellness, debt relief orders are a lesser-known solution but ideal for people who don't have assets like a home and have very little money left at the end of the month. After 12 months, any debts are written off if there is no improvement in financial situation, and it also stops creditors and bailiffs from pursuing the debt.
