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Debt Relief Order (DRO)
A Debt Relief Order (DRO) is a type of insolvency. It has a duration of 12 months and if approved, at the end of the 12 month term, all included debts are written off giving you a fresh start. To qualify for a DRO you must have debts of £20,000 or less and a disposable income of £50 or less.
Advantages
- A DRO is a formal option, so included creditors cannot chase you for payment.
- A DRO has a relatively low set-up cost of £90, which can be paid in instalments.
- Once a DRO is active, any repayments towards debts bound by the DRO stop.
- Interest and charges on included debts will be frozen
- All debts in a DRO are written off 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 could have serious consequences which may 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 DRO is instated.
- It is a criminal offence to falsify information on a DRO
- Your details will appear on a public register.
- Being subject to a Debt Relief Order can affect certain employment roles and professions. Always check your employment contract if you are unsure.
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