Is there a Way to Pay off Debts Quickly?

August 19, 2014

Every debtor’s situation is completely different and necessitates unique solutions based upon these factors. While it is beneficial for some debtors to wipe out their debt slowly over time with minimal impact upon their financial life, some debtors need to pay off their debts quickly.

Here are a few solutions for those who want to become debt-free fast.

Bankruptcy

Seeking bankruptcy can help you write off your debts after one year if your unsecured debts outweigh your income and assets. However, due to the significant repercussions of seeking bankruptcy, it should only be sought as a last resort.

Those who can find no alternative to their insolvency must apply for bankruptcy through the courts. This application requires a £525 deposit and £175 court fees payment, although the latter may be waived if the applicant is on low income.

If the courts accept the application for bankruptcy, the debtor’s creditors must accept this and stop pursuing the outstanding debts. The bankruptcy lasts for one year and then the unsecured debts are completely written off.

However, bankruptcy will seriously affect your credit rating, staying on your credit file for 6 years. Furthermore, all personal assets not considered vital to your personal life or job may be sold off as a part of the bankruptcy. If you own a business, any assets belonging to the business may be sold off and you may lose your professional status.

As terms of the bankruptcy, you may be expected to make payments on any income you accrue during the bankruptcy. Additionally, during the bankruptcy you will be unable to open anything more than a normal bank account.

Contact the InControl team on 0800 072 6623 and we will help you determine whether you would benefit from seeking bankruptcy.

Debt Relief Order

A Debt Relief Order (DRO) is a form of insolvency which can potentially wipe out your debts after 12 months. Aimed at those with minimal disposable income and debts up to £15,000, the DRO freezes debts for 12 months, meaning the included creditors cannot take further action against the debtor during this period. If the debtor’s financial situation has not improved after 12 months, the affected debts are completely written off.

To be Eligible for a DRO, you must:

  • Have debts less than £15,000
  • Not own a vehicle over the value of £1,000
  • Not have savings or assets worth more than £300
  • Disposable income of less than £50

However, there are disadvantages to seeking a DRO, with the solution containing many of the same repercussions as bankruptcy. An individual who takes out a DRO will seriously impact upon their credit rating, remaining on the credit file for 6 years. Additionally, it costs £90 to apply for a Debt Relief Order.

Whether you are seeking a quick or long-term solution for your debts, the InControl team may be able to help you make the best decision for your situation. Visit our home page or contact our dedicated customer service team on 0800 072 6623.