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What is a debt relief order?
A debt relief order (DRO) is a way for people to break free of debt. As long as you meet a specific list of requirements, a DRO can help you become debt free quickly in comparison to similar methods. Widely available throughout the UK, debt relief orders have proven so effective because they are relatively straight forward once they have been entered.
The criteria you must match before you can be considered for a DRO is quite stringent and includes your total debt being less than £20,000 and the requirement that you do not own your own home. Because of such requirements, and the very real consequences of entering one, a DRO is not suitable for everyone. Therefore, it is always recommended that you seek expert advice whenever possible before applying for a DRO. Most Citizens Advice Bureaux will have a DRO adviser who will be able to help you decide whether a DRO is appropriate for you or not.
Is a DRO the best option for me?
A debt relief order is the best route for many with extreme debt, however it isn’t suitable for everybody as it only covers certain types and amounts of debt. A DRO can also have a signifcant impact on your credit rating and your lifestyle, so shouldn’t be taken without caution. Depending on your circumstances, there may be other better options. These options include debt consolidation, Individual Voluntary Arrangements (IVAs) and Bankruptcy. Complete our quick online assessment to see which is best for you.Take our quick online test
What does a Debt Relief Order do?
A DRO enables you to write off certain debts that are covered under the DRO agreement. These debts, such as credit card payments and council tax, are written off after a specified period – often around 1-year. However, because a DRO is a very specific type of debt relief, it only covers certain types of debt. Therefore, even if you are accepted for a DRO, you must continue to make payments to any other debts not covered by it during this period. Because of the nature of a DRO, they are not recommended for everyone and can often be difficult to enter because of their strict pre-application requirements.
What do I need to know about a DRO?
Debt Relief Orders are designed to help people escape debt. However, as with other types of debt management, there are many different things to consider. Such factors include how much you will have to pay to enter a DRO, how much you will have to repay in total, and of course what effects it will have on your life – both immediately and in the long term. Other factors to consider include how many times you can apply for a DRO, as well as what affect it will have on related areas such as your mortgage, bank account, and business.
How will a DRO affect my credit rating?
As with other debt management programs, a DRO can have a very big effect on your credit rating; making it much more difficult to get loans and enter similar programs in the future. Furthermore, a DRO will be recorded on your credit history for 6-years, making it difficult to lend money and open bank accounts in the future. Because of this, many people are rightly wary of entering a DRO. As such, people are always recommended to get expert advice before considering a CRO.