12 months and my debts are written off? Is it really as simple as that?
Not a lot of people know what a Debt Relief Order (DRO) is. This may be because this option is not offered as a solution under the category of insolvency quite as much as an Individual Voluntary Arrangement (IVA) is.
Hold on a minute!
Just one quick point before you carry on! It’s important to know that this page is a brief overview of Debt Relief Orders (DRO’s). To get the full details and understanding of this subject click here or at the bottom of page in the purple box.
Just like an IVA, at the outset, it may sound like a great idea, that’s before you really dig into the detail.
What is a Debt Relief Order(DRO)?
Putting it simply, it’s a way of tackling your debts if you feel you are struggling to pay them. You won’t need to make any payments towards any debts that are accepted into the Debt Relief Order (DRO) for a period of 12 months after that the rest of the debt is written off.
That is the very basic description. As you may have guessed all that glitters is not necessarily gold. There are certain criteria you need to meet, one of which is you need to have less than £75 left to spend at the end of each month.
You also have restrictions like not being able to manage a business without the court's permission and will be placed on a public register for anyone to see you’re insolvent. Also, we did say DRO’s last for 12 months but that is not always the case, they can be extended for several years. It's also important for you to know that not all debts can be entered into a Debt Relief Order (DRO), to learn more about which debts cannot be included read the Debt Relief Order article in the purple box below.
What's the alternative to a Debt Relief Order?
Before taking a look at your options your starting point, like we always say, should be to check if your debt is statute barred. If your debt is over six years old and you haven’t paid towards, communicated about or the debt has not gone to court it may be statute barred. You can read more details about this in the article in the purple box below. In short, it could mean that your debt can be handled with one simple letter (you've probably guessed that we got you covered there too).
My debt is not statute barred
If your debt isn’t statute barred and you fully understand what a Debt Relief Order is, along with the potential impacts and its pros and cons based on your own situation, it’s now time to look at alternatives that may not be as drastic.
If your debts are unsecured, under the Financial Conduct Authority (FCA) Handbook section 7.3.5 you have the option of making token payments towards your debts. This is just one option; we have reviewed other options that you may encounter highlighting any pros and cons without creditor or debt collector bias as usual. We have more details about how to handle financial difficulties with unsecured debts here, in this area we cover each option at length. Putting it simply you can handle these types of debts without going down the insolvency route.
We've got your back
Any form of insolvency which includes Debt Relief Orders (DRO’s) should never be entered into lightly. The impact it can have on you, if not understood, can have quite a negative effect on your day-to-day life. We are never here to make decisions for you, we are here to make sure that there are no gaps in the information you are receiving before you make the decision.
TRDG has and always will have your back.