Could a DRO help you get back on top of your debt problems? Let’s take a look.

Is a DRO suitable for me?

If you simply cannot afford to repay a significant amount of unsecured debt in the foreseeable future, bankruptcy is often considered a suitable approach.

However, for some borrowers who have a low income and few assets, the high cost of bankruptcy makes this option impossible. This is where a Debt Relief Order could provide an ideal alternative.

You could qualify for a DRO if:

• You have unsecured debts of no more than £15,000 that you can’t afford to pay back.
• You have total assets worth less than £300 in total (although this can include a car worth up to £1,000).
• You have a monthly disposable income (after your essential outgoings) of less than £50.
• You haven’t had a DRO in the past six years.
• You aren’t going through any other form of insolvency.

Bear in mind that, if you do enter a DRO, your credit rating will be affected for six years from the day it starts.

Visit http://www.debtadvicenow.co.uk/dro-debt-relief-order/ for more information.

How does a DRO work?

If your DRO application is successful, you’ll have your unsecured debt repayments effectively frozen for a 12-month period, which means you won’t have to make any payments during this period and interest & charges won’t be added to your debts, so they won’t continue to grow.

During this ‘moratorium’, your lenders will also be prevented from taking any legal action against you.

Then, if your circumstances haven’t improved by the end of the year, all debts included in your DRO will be written off – so you’ll have no more liability towards them.

About the Author: M Jackson is a financial advisor for Debt Advice Community. She brings an unique perspective on personal finance, frugality and all kinds of consumer financial products and services.

Alternative No.1: Look for personal loan

When you can’t settle your outstanding balances through credit card debt elimination, you are required to pay your debt in full. In order to reduce your financial burden, you are suggested to apply for personal loan which charges you lower interest rate. In general, the interest rates for most of the credit cards are high.

If you can obtain personal loan which offers you lower interest rate, go ahead to obtain the loan to pay off your credit card debts first. If you are looking for zero interest loan, you can borrow from friends or family members.

Alternative No. 2: Consolidate all your unsecured debts

If you have multiple credit card debts, you are advised to LUMP all your outstanding balances and apply for one single loan. Get this financial assistance with lower interest rate. Clearing off your credit card debts and paying back one single loan will definitely make your debt more manageable.

Alternative No. 3: Raise additional fund on your own

If you are not qualified to obtain loan due to poor credit, you still stand high chance to raise cash. You are encouraged to look for part time job to increase your monthly income. If it is still not sufficient, you are advised to sell off some of your valuable assets such as car, house or jewelry to raise fund.

Alternative No. 4: “REVISE” your monthly budget carefully

Are you currently working? If yes, I am sure you have your monthly income to support your daily expenses. What you need to do is to cut down all the unnecessary monthly expenses and save more money to make minimum payment to your credit card accounts. If you have extra income, use it to pay off high interest credit card first. Follow the same procedure to clear your credit card debts one by one.

Last Alternative: Consider declaring bankruptcy

Filing bankruptcy is your last resort. Don’t consider this solution if the above mentioned methods can be applied. Before you take further action, you are reminded to find out whether you are a qualified candidate to become a bankruptcy. Not everyone in debt is allowed by the law to do so.

When your debt settlement proposal has been rejected, don’t be upset. It is not the end of the day. There are many other alternatives you can take to overcome your debt problems. The most important is NEVER EVER ignore your debt after your settlement offer has been rejected. Be determined and optimistic. Your future is still bright.