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What is a DRO?
A debt relief order (DRO) is a way to deal with your debts if:
- you owe £50,000 or less
- you’re not a homeowner
- you don’t own other things of value
- you have very little spare money at the end of the month.
A DRO lasts for 12 months. If your situation doesn’t improve during that time, your debts are written off.
During your debt relief order creditors aren’t allowed to chase you to pay. If it’s the right option for you a qualified intermediary will make an application to the Insolvency Service on your behalf.
How much does a DRO cost?
There is no cost to the individual for a DRO.
Benefits
- Your qualifying unsecured debts are frozen for 12 months.
- Your lenders are not allowed to chase you for payment.
- Your debt is written off after 12 months if your situation doesn’t improve.
Disadvantages
- You will need to check if a DRO is suitable and understand the alternatives first.
- Your credit rating will be affected for six years.
- If your financial circumstances improve during the 12 months, your DRO will end and you’ll need to make arrangements to repay your debts.
- It may be asked on future job and rent applications if you have completed a DRO before.
