question category: Debt Relief Order

Can you apply for a DRO if you own your own home if on £0 equity?


I owe £15,000, have virtually no income due to my failing business, my home is worth less or £0 above wht is outstanding on the mortgage but I do not want to lose it, my husband is currently paying all my home related bills plus his own personal borrowing.

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Re: Can you apply for a DRO if you own your own home if on ...

Unfortunately, the rules on who can enter a Debt Relief Order (DRO) are very strict. This is because Government indented the DRO to be a simplified version of Bankruptcy for straightforward insolvency cases where no assets were involved. Even if your home is in negative equity, you are still not eligible. You need to meet the following criteria to qualify:

·Be unable to meet your debt repayments as they fall due

·Owe less that £15,000 in qualifying debts (these are any unsecured debts excluding court fines, new student loans and child maintenance)

· Have less than £50 available to offer to your creditors each month (after essential livings costs and priority debts have been taken into consideration)

·Have less than £300 in non-vehicle assets (including savings)

·Not have a vehicle with a value in excess of £1000

If you’re insolvent and have no equity in your home, it sounds like you should explore Bankruptcy. Whilst your home is at risk in Bankruptcy, the Official Receiver will only look at a forced sale if there is equity available to release to your creditors.

 

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