A debt relief order, or DRO is a low-cost alternative to bankruptcy. It’s a way to have your debts written off if you can’t
realistically afford to pay them. You must fit certain criteria to qualify and
you can only get a DRO through an approved organization such as
StepChange Debt Charity. I f you qualify our specialist DRO team can apply to the
Insolvency Service for you. To qualify for a DRO you must live in England, Wales
or Northern Ireland or have run a business in one of these countries
within the last three years. You must be unable to pay off your debt.
You must a few or no assets And if you own a car it can’t be worth more than a
thousand pounds. To be eligible the total amount you owe must add up to less than
twenty thousand pounds You must have less than 50 pounds left
over each month after your essential living costs are covered and you mustn’t
own a property such as a house. If these criteria apply to you then a DRO
could be a solution to your debt problem. A DRO freezes your debt repayment for 12
months this is called the moratorium period. If your financial situation
hasn’t changed by the end of this period then your debts will be written off. As soon as your DRO is approved the creditors included can’t take an y action to collect the debt from you and they should also stop asking you for payments.
Although a DRO is a legally binding solution you won’t need to
appear in court. As with any debt solution there are things you should
consider before entering into a DRO. You should bear in mind that you have to pay a £90 set up fee to the insolvency service. The DRO will also affect your credit rating for 6 years from the date it is approved. You’re likely to find it
harder to get credit within this time. Should something change during the 12-month moratorium period your DRO may be cancelled. This would only happen if you no longer meet the criteria for a DRO Such as receiving a significant pay rise or an inheritance. Some debts can’t be
included in a DRO these include court fines, student loans,
and child maintenance payments. With any debt solution it’s important to get debt advice to make sure it’s suitable for you. We offer free debt advice through our
debt helpline, alternatively you can go online and use our debt advice tool Debt Remedy. We’ll talk you through your situation and recommend the best solution for you.