Debt Relief Order
What is a Debt Relief Order?
A debt relief order is a solution which freezes all of your debts for 12 months. If at the end of the 12 month period your circumstances haven’t changed, all debts included in the debt relief order will be written off.
Who can apply for a Debt Relief Order?
To apply for a Debt Relief Order you will need to owe under £20,000, have less than £1000 worth of assets and be unable to contribute more than £50 per month towards your debts.
Advantages
- A Debt Relief Order is a formal solution, so included creditors cannot chase for payment
- A DRO has a relatively low set-up cost of £90, which can be paid in instalments
- Once a DRO is active, repayments towards included debts stop
Interest and charges on included debts will be frozen for the 12 months the DRO is active - All debts in a DRO are cleared after one year if a customer’s situation does not improve
Disadvantages
- You will have to abide by a set of restrictions and breaking these will have serious consequences which can include a fine, an extension of the restrictions up to 15 years or even prison.
- Your credit rating will be severely impacted and your ability to get credit will be affected for six years, from the date the debt relief order is instated.
- It is a criminal offence to falsify information on a DRO
- You will be listed on a public register
- Being subject to a Debt Relief Order can affect certain employment roles and professions. Check your employment contract if you are unsure.