I fell into £30k debt after my husband died – how a little-known method helped me clear it
BORROWERS who are struggling to repay bills may be able to wipe all of their debt using a little-known method.
Owing almost £30,000 of money left Cherieda Maw, 55, feeling hopeless and alone.
She couldn’t afford to pay back the cash or stay on top of repayments.
At the same time, multiple firms were contacting her about the outstanding debt which included credit card and energy bills among others.
Cherieda told The Sun: “It was stressful. Every single day I had a creditor letter come through my door.
“It was a constant thing – the phone calls and knocking. Bailiffs came round to my house.
“I had to pay £500 or he said he would take my TV. I then had to find the money off my family for him to not take it.”
Cherieda recently realised she could qualify for a debt relief order (DRO).
Under the arrangement, debts are frozen for 12 months and during this time creditors are not allowed to contact you or ask for payments.
If your financial situation has not improved after 12 months, the debts are completely wiped.
Cherieda paid £90 to get the debt order set up with Money Wellness – an organisation backed by the government’s Money and Pensions (MaPS).
Money had become a problem for Cherieda after her husband passed away in 2014.
She has a disability that means she is unable to work.
And though she does get some help from benefits, she soon found that her debts were spiralling out of control.
Cherieda said: “The bills were coming in quick and fast.”
After the worry built up, the widower tried to get a handle on her finances with an Individual Voluntary Arrangement (IVA).
Under these agreements, an insolvency practitioner will liaise with creditors and work out an agreed amount to repay each month.
However, the fees charged by debt management companies for an IVA can be sky high.
Cherieda said she paid the company around £120 each month and it took a cut before paying the rest to creditors.
However, she was finding it hard to stay on top of the plan.
And after missing one payment, she was then required to find two months’ worth of payments for the following instalment.
Cherieda said: “It was a vicious circle.”
The plan was cancelled and she found herself back in the same situation of being hounded by creditors.
Cherieda found out that she could qualify for a debt relief order after contacting Money Wellness earlier this year.
The organisation offers free debt advice.
An adviser went through Cherieda’s creditors, income and expenditure, and worked out she could benefit from a DRO.
She paid a £90 fee for the arrangement to be put in place and was then approved.
Cherieda said: “Since 2014 it had all built up. When I got the email to say I had been approved, it was like the weight had lifted.
“The worry was gone. Money Wellness took all the stress off my shoulders.
“People don’t know that they’re there to help – and it’s free.”
There is no need to pay for debt advice as there are charities and organisations backed by the government to give free help.
Using these services can give an overview of the options available to you or provide some tips on how to get in control of your finances.
Most of them can offer you free guidance and help in person, over the telephone or online.
As well as Money Wellness, you can also contact:
- Citizens Advice – 0808 800 9060
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000
If you are finding that is affecting you mental health, you can also talk to someone from charities Mind and Samaritans.
What is a debt relief order?
A debt relief order will freeze your debt for 12 months. And creditors will not be able to contact you about money owed during this time.
If there is no uplift in your financial situation after the year, the debt is wiped off.
The arrangement is only an option if you owe less than £30,000.
And you won’t qualify if own your home or another property .
You will need to show that you have £75 or less left over each month after paying for bills and other essentials.
You must not have have savings or a single possession worth more than £2,000.
You can’t take out a DRO if you have an IVA in place or if you’re going through bankruptcy.
And you can only go through one DRO in six years.
You will also need to show that you haven’t worked in the last three years in England or Wales.
You can only apply for a DRO through a specialist DRO adviser.
This professional person will have the skills and permission to complete forms, as well as give advice on DROs.
This person can then check you qualify and that a DRO is right for you.
The free debt charities can signpost you to a specialist adviser.
Sara Williams from website Debt Camel said: “Debt Relief Orders can be a very good debt solution for someone with debts under £30,000 that they are struggling to repay because they have little money left after paying their bills and essential living costs.
“You can’t have a DRO if you own a house or if you have a car worth over £2,000.
“In a DRO you pay a £90 fee at the start, but then there aren’t any monthly payments.
“A lot of people struggling in debt management plans or in an IVA where the payments are too high because of the cost of living should look at switching to a DRO. Talk to a good debt adviser like National Debtline or your local Citizens Advice.”
A spokeswoman for Money Wellness added: “If you’re struggling with debt, it’s always best to seek free, independent advice to make sure you get the best solution for your individual needs.
“Relatively less well known, compared to products like IVAs and debt management plans, debt relief orders are a good solution for people who don’t have assets like a home and have very little to spend at the end of the month.
“After 12 months, any debts are written off if a person’s financial situation doesn’t improve and it is also means creditors and bailiffs stop chasing once it’s in place.”