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Other Debt Solutions

Some other types of solutions available to you if you are struggling with debt are:

A County Court Administration Order (CCAO)

If you owe less than £5,000 to at least 2 creditors, of which 1 creditor has obtained a County Court Judgment, you’re eligible to apply for a County Court Administration Order (CCAO).

The Court will decide what you can afford to repay each month after taking into account your income and expenditure, you pay them and they will deduct 10% from your payment as a fee. You will repay your debts in full, but if you comply with the order your creditors cannot take any further enforcement action against you and debt collection actions will stop.


Pros

  • None of the creditors listed on the administration order application can take further action against you without the court’s permission.
  • The court deals with the creditors and shares out the payments for you.
  • Interest and other charges are stopped
  • There is no upfront fee – the court takes 10p of every £1 you repay.
  • You can apply to make payments for a limited time, such as 3 years, using a ‘composition order’.
  • If your circumstances worsen, you can apply to the court to make reduced payments.
  • You may be able to continue running any business you have.

Cons

  • Creditors can put objections to the court and ask to be left out of the order. The court need not agree to this.
  • If you don’t keep up your payments, the order can be revoked (withdrawn) and the creditors can pursue you again.
  • If the court makes an attachment of earnings order, your employer will find out about your money troubles.

Debt Relief Order (DRO)

A Debt Relief Order (DRO) can help you to rid yourself of debt if you are unable to repay it over a reasonable amount of time.

Is a Debt Relief Order suitable for me?

To be considered for a DRO your situation must fit the following criteria:

  • You owe less than £15,000 in unsecured credit debts
  • You are not a homeowner
  • You have no more than £300 assets
    (although one car up to the value of £1000 will be exempt)
  • You have less than £50 a month income left over after you’ve paid all of your living costs

What does a DRO cost?

Debt Relief Orders help people in severe financial difficulties who have a low income. They are a cheaper alternative to bankruptcy as the cost for a DRO is currently £90*.

How does a DRO work?

Your debts are frozen for a period of twelve months. During this time your creditors agree not to pursue you for the outstanding debt, nor add further interest on the balances. If, after the twelve months, your circumstances have not improved, the debts are written off.

* The cost of Debt Relief Order as of 8th March 2012


FAQ's on DRO

What assets would be considered in a debt relief order application?

The following assets would be considered in a DRO application. If the combined value of them is more than £300 you would not qualify.

  • Savings/shares
  • Vehicles/caravans (although one vehicle up to the value of £1000 will be allowed)
  • Collectibles/antiques

Items such as furniture, tools for trade and household equipment will not be considered.

Are any debts excluded from a debt relief order?
  • Student loans will be excluded
  • Most court fines will be excluded. You will need to make an arrangement to pay these
  • Child maintenance arrears cannot be included. You will need to make an arrangement to pay these

Will my credit rating be affected?

By entering into a debt solution, your credit rating may be affected. Even though you may come to an amicable agreement with your creditors to reduce your payments, reduced or missed payments can be recorded by credit agencies to reflect that you have not kept up with the original repayment schedule.

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