Debt Relief Order Case Study Two

Background

Alison is single. She works in an office and has been advised that she will definitely be promoted in the next 6 months, which will increase her salary by £2000 per year.

She lives with her boyfriend in rented accommodation and they split the bills in half. She owns a car worth £400, which is currently off the road, as she cannot afford to run it.

She has £3500 on a credit card and is paying a Bailiff for council tax arrears, at £65 per month. She has £500 outstanding.

Her income is £925 per month and having gone through her budget, she has £28.50 per month left over once she has paid all essential costs.

Does she qualify for a Debt Relief Order?

The answer is 'No', she doesn’t.

Her current surplus income is £28.50 per month. This is within the maximum £50 per month allowed.

However...

She is paying the Bailiff £65 per month. The Council Tax arrears can be included in the Debt Relief Order and this would increase her surplus by that £65 per month to £93.50 per month.

She has also been told that she will be promoted within 6 months and her annual salary would increase by £2000. Again this would give her additional surplus income and so, even if the Debt Relief Order had been approved, she would have an obligation to make the Official Receiver aware of her changes in circumstances, and the Debt Relief Order could be revoked, meaning she becomes liable to pay the debts again. Her £90 fee would not be refunded.

Therefore it is essential that when an applicant considers a Debt Relief Order, they make the Intermediary aware of all circumstances at the start.

If you would like more information please contact us Money Advice Direct on 0800 074 6918 or fill in our form by clicking here.

If you are unsure as to whether an Debt Relief Order is the best way to solve your debt problems please call us on 0800 074 6918.

If you wish to discuss the Debt Relief Order procedure and understand how it can help you please complete the following form or telephone freephone 0800 074 6918.

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Listed below are some of the frequently asked questions relating to Debt Relief Orders

• Introduction to Debt Relief Orders
• What is a Debt Relief Order?
• What debts can be included in a Debt Relief Order?
• What debts are excluded from a DebtRelief Order?
• Is my Hire Purchase affected by a Debt Relief Order?
• Is my Motability Car Scheme affected by a Debt Relief Order?
• Who can apply for a Debt Relief Order?
• What is a Competent Authority?
• What is an Approved Intermediary?
• What is the cost of a Debt Relief Order?
• Why should I consider a Debt Relief Order rather than Bankruptcy?
• How do I apply for a Debt Relief Order?
• Who decides if my Debt Relief Order is approved?
• What if my circumstances change whilst I am in a Debt Relief Order?
• How will my creditors know I am in a Debt Relief Order?
• What happens to interest and charges if I am in a Debt Relief Order?
• Rent Arrears and Debt Relief Order's
• Will I be allowed a reasonable standard of living?
• Debt Relief Order Case Study 1
• Debt Relief Order Case Study 2
• Debts incurred after the granting of a Debt Relief Order
• What are the restrictions of a Debt Relief Order?
• What happens if you are dishonest before or during a Debt Relief Order?
• How will a Debt Relief Order affect you?
• What debts are not covered by a Debt Relief Order?
• Will a Debt Relief Order (DRO) affect my council tenancy as I am in debt?
• Can I apply to the Police if I have a Debt Relief Order (DRO)?
• Does getting a job after getting a Debt Relief Order (DRO) affect me, because I am seriously in debt?