BORROWERS who are struggling to pay their bills could be able to wipe out all their debts using a little-known method.
Cherieda Maw, 55, owed almost £30,000 in money, feeling alone and desperate.
She couldn’t afford to pay the money back or stay on top of her repayments.
At the same time, several companies were contacting her about unpaid debt, which included, among other things, credit card and energy bills.
Cherieda told The Sun: “It was stressful. Every day a letter from a creditor arrived at my door.
“It was a constant thing: the phone calls and the beatings. Bailiffs came to my house.
“I had to pay £500 or he told me he would take my TV. I then had to get the money back from my family so they wouldn’t take it.
Cherieda recently realized she could benefit from a Debt Relief Order (DRO).
Under this arrangement, debts are frozen for 12 months and during this period creditors are not allowed to contact you or request payments.
If your financial situation does not improve after 12 months, the debts are completely erased.
Cherieda paid £90 to obtain the debt order from Money Wellness – a government-backed organization Money and Pensions (MaPS).
Money became an issue for Cherieda after her husband died in 2014.
She suffers from a disability which prevents her from working.
And although she received some help in the form of benefits, she soon discovered that her debts were spiraling out of control.
Cherieda said: “The bills were coming quickly and quickly. »
Once the worry built up, the widower attempted to get his finances under control through an Individual Voluntary Arrangement (IVA).
Under these agreements, an insolvency practitioner will liaise with creditors and determine an agreed amount to be repaid each month.
However, the fees charged by debt management companies for an IVA can be exorbitant.
Cherieda said she paid the company around £120 each month and needed a reduction before paying the rest to creditors.
However, she had difficulty following her plan.
And after missing one payment, she had to track down two months of payments for the next installment.
Cherieda said: “It was a vicious cycle. »
The plan was canceled and she found herself in the same situation of being hounded by creditors.
Cherieda found out she was eligible for a debt relief order after contacting Money Wellness earlier this year.
The organization offers free debt advice.
An advisor reviewed Cherieda’s creditors, income and expenses and determined that she could benefit from a DRO.
She paid a £90 fee to have the arrangement put in place and was later approved.
Cherieda said: “Since 2014, everything has been piling up. When I received the email letting me know I had been approved, it was like the weight had lifted.
“The worry was gone. Money Wellness took all the stress away.
“People don’t know they’re there to help – and it’s free.”
There is no need to pay for debt advice as there are charities and government-backed organizations to provide free help.
Using these services can give you insight into the options available to you or provide you with some advice on how to take control of your finances.
Most of them can offer you free advice and support in person, over the phone or online.
Besides Money Wellness, you can also contact:
If you find this is affecting your mental health, you can also talk to someone at the charity Mind and Samaritans.
What is a debt relief order?
A debt relief order will freeze your debt for 12 months. And creditors won’t be able to contact you about money owed during this time.
If your financial situation does not improve after the year, the debt is forgiven.
This arrangement is only an option if you owe less than £30,000.
And you won’t qualify if you own your home or other property.
You’ll need to prove you have £75 or less left each month after paying bills and other essentials.
You must not have any savings or possessions worth more than £2,000.
You cannot take out a DRO if you have an IVA in place or are bankrupt.
And you can only go through one scrutineer every six years.
You will also need to prove that you have not worked in the last three years in England or Wales.
You can only request a DRO through a specialist DRO advisor.
This professional person will have the skills and permission to complete forms, as well as provide advice on DROs.
This person can then verify that you are eligible and that a deputy returning officer is suitable for you.
Free debt charities can refer you to a specialist advisor.
Sara Williams from the Debt Camel website said: “Debt relief orders can be a really good debt solution for someone with debts of less than £30,000 that they are struggling to pay off because he has little money left after paying his bills and essential living expenses.
“You can’t have a DRO if you own a house or have a car worth more than £2,000.
“In a DRO you pay a fee of £90 up front, but then there are no monthly payments.
“Many people struggling with debt management plans or with an IVA where payments are too high due to the cost of living should consider switching to a DRO. Talk to a good debt advisor like National Debtline or your local Citizens Advice.”
A spokeswoman for Money Wellness added: “If you are struggling with debt, it is always best to seek free, independent advice to ensure you get the best solution for your individual needs.
“Relatively less well known than products like IVAs and debt management plans, debt relief orders are a good solution for people who have no assets like a house and who have very little to spend at the end of the month.
“After 12 months all debts are canceled if a person’s financial situation does not improve and this also means creditors and bailiffs stop chasing after this once this is in place.”
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