What is a Debt-Relief Order?

//What is a Debt-Relief Order?

What is a Debt-Relief Order?

Debt relief orders might seem quite self-explanatory, but there’s a lot more to it than you think.

Also abbreviated as DRO, debt-relief orders are considered a much cheaper option than filing for bankruptcy.

Now, bankruptcy sounds like a severe financial crisis, which means a debt-relief order would be the last resort to turn towards before filing for bankruptcy.

Since it is much cheaper to get a DRO, there is a specific set of criteria you first need to follow before being able to apply for one.

Requirements for Qualifying for a DRO

To qualify for a DRO, you’ll first need to owe less than R300 000 to qualify to get help. Since there is only a low percentage of people who are allowed to access that much debt, to begin with within South Africa, due to low wages and being a developing country, it’s quite easy to get a DRO.

If you own a car, it’s also required to be less than R170 000, to be able to qualify for a DRO. Other conditions include not owning something that could be sold to cover your debt and cancel it out as debt, rather than getting a DRO to cover it, or if you have an amount equivalent or lower than R 750,00 left at the end of each month after deducting your expenses from your income.

You’re also not allowed to apply for a DRO if you’ve applied for one within the last six years.

How to Acquire a DRO

When applying for a DRO, you’ll need to consult an approved intermediary, whom will be able to guide you with the steps to obtaining a DRO.

There is usually a fee involved when applying for one, which can be paid in instalments if required.

When the DRO is set in place and accepted, one doesn’t have to pay any additional fees for up to a year. In this period, creditors aren’t allowed to call you or request payment.

However, the year is over, your debt will be considered written off and you if your financial criteria changes, you’ll have to pay it back.

A DRO is considered a great option to get yourself out of severe debt, without having to endure further measures taken against you, as well as prosecution.

Need help with debt relief? Credit Matters can assist you with debt counselling.

By |2018-08-06T21:14:48+00:00August 6th, 2018|Debt Relief Order|0 Comments

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