Debt Recovery Order

Debt Recovery Order

A debt recovery order, or a debt relief order, is an order that can help you deal with issues like inability to pay off a debt or multiple debts on time. Generally speaking, it is an alternative to bankruptcy, and you can apply for it as a physical person, as well as a legal person. We at UK Debt Recovery have a lot of experience dealing with both creditors and debtors, and many debtors that we've dealt with have chosen to apply for a debt recovery order. For that reason, we believe that it is very important for you to know what a debt recovery order is and whether you can exercise that option. Our professionals at UK Debt Recovery have prepared this post on debt relief orders especially for you.

As we stated earlier, a debt recovery order is a remedy you can apply for as a less costly alternative to bankruptcy if you are unable to pay off your debts and your income is low. The order is granted by the Insolvency Service and as a result, the debtors are unable to demand any money from you for the duration of twelve months, following which, your debts are written off. There are, of course, certain requirements that an applicant needs to satisfy before he or she can apply for a debt recovery order.

First of all, the applicant's monthly spare income used to pay off the creditors must be less than £50. Secondly, the total amount of money owed cannot be over £15,000 - and that includes all the debts owed by the applicant, not just a single one. The applicant also must not own his or her home and the estimated cost of their assets must not be over £300 in total. Of course, all of these requirements can be discretionary in the event of extenuating circumstances. In any event, a debtor cannot apply for a debt recovery order if he or she owns a vehicle the value of which is over £1,000 and the total amount of his or her assets and savings is more than £300. If you need any further clarifications on the subject of application requirements or want to discuss your options and request further assistance with your debt relief order application, don't hesitate to get in touch.

In order to work out whether you satisfy the requirements for a debt relief order listed above, we recommend that you carry out some calculations in order to figure out how much disposable income you have available. In order to do that, you need to make a list of all your sources of income. These can include the obvious, like your monthly (hourly) salary or wages, your rental income from any property, and any welfare benefits you receive. We suggest that you also take into account things like contributions from other members of your household, and your pension. Once you have made a list and calculated the amounts you receive monthly from these sources, try to deduct an amount that you use for your everyday needs. In order to be able to apply for a debt recovery order, that amount should be less than £50, as we specified above.

When you are carrying out the calculations, you should keep in mind that there are certain essential expenses that you do not need to take into account. This list is not exhaustive, but generally, these expenses would include:

- Essential household items

- Tools that you use on a daily basis in order to obtain your income; e.g. accounting books, or carpentry equipment

- A vehicle and other items that you require due to a disability

- A vehicle the value of which is less than £1000

You should also keep in mind that not all debts that you have fall under the umbrella of eligibility for a debt recovery order. The debts that can be included in your debt recovery order include:

- Rent, bills and utilities

- Council tax

- Overpayments for benefits obtained in good faith without any fraudulent operations conducted by you - please contact us for further information

- Credit cards, various kinds of loans (with the exception of student loans), certain types of overdrafts - please contact us for further information

- Agreements of the "buy now, pay later" type - please contact us for further information

- Conditional sale agreements or hire purchase agreements - please contact us for further information. Please bear in mind that if you are applying for a debt relief order, you would have to return the goods that you have purchased with the loans included in this category, unless there is another person that is willing to continue payments on them for you.

The list above makes it fairly clear what types of debts you can obtain a debt recovery order against. You should also bear in mind that you absolutely cannot obtain a debt recovery order against certain debts that you might have incurred. These debts include:

- Student loans

- Court fines and various other types of fines and confiscation orders. For more information in relation to repayment of the fines related to criminal activity, please contact us

- Social fund loans

- Child support and maintenance

If you feel that you satisfy all the requirements that we've listed above, and provided that you are not currently involved in bankruptcy proceedings against you, you haven't filed a debt recovery order in the last six years, you are not in the process of applying for an Individual Voluntary Arrangement, and you haven't been granted a Debt Relief Restriction Order, you can proceed with your application. It is very important that you don't put any false or misleading information into your application - failure to do so is a criminal offence and might lead to persecution, unless you can prove that there was no intention to conceal information or deceive anyone.

You must not withhold any relevant information from the Official Receiver in charge of processing your application. While your application is processed, you cannot apply for any loan over £500 without informing the lender that you're applying for a debt recovery order, or run a business under the name which you've used on your debt relief order application without informing your clients, suppliers and others involved that you've applied for a debt recovery order. You also cannot set up companies or act as a company director without the court's express permission while your debt recovery order application is being processed. Doing any of the things listed above is an offence and might lead to a refusal or even persecution. Even if you've been granted a debt recovery order, if your Official Receiver finds out that you've been engaging in any of the activities above, he or she might apply for a Debt Relief Restriction Order or withdraw their approval of your application.

The applications, as we stated above, are processed by the Insolvency Service. Once your application is approved, you don't have to pay your creditors for the debts listed on the application for the duration of the debt recovery order. Your creditors will be informed about your debt recovery order and you shouldn't experience any harassment from them, provided that everything is in order.

If your financial or personal circumstances change during the twelve months of your debt recovery order, you would need to inform your Official Receiver as soon as possible. Failure to do so constitutes an offence and may lead to revocation of your debt relief order, Debt Relief Restriction Order or even persecution.

After you are granted a debt relief order, you do not have to pay your creditors listed in the order, but you still have to make payments on any other debts that you have (student loans etc.). You can still open bank accounts, but you must inform the bank of your debt relief order, which might make it difficult to be eligible for certain accounts. For more information about banking restrictions, please contact us or your local bank.

If, unfortunately, you have been granted a Debt Relief Restriction Order, the restrictions listed on it can last 2-15 years, depending on the severity of your circumstances. However, unless specified otherwise, your debt relief order would still apply to the debts listed on it and they'll be written off upon the expiration of the debt recovery order period (twelve months).

If you have any questions about debt recovery orders, don't hesitate to get in touch.

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