When you’re applying for a loan, you may see it somewhere in the application – “We can’t help you at this time if you’re currently under an DRO” and wonder what that is.
In this month’s MoneyTalk we will explain what an DRO is and when you might need one.
DRO stands for debt relief order. It can be used as an alternative to an IVR or bankruptcy.
When you have a debt relief order, you don’t have to make any payments towards your debts and the interest is frozen.
A DRO typically lasts for 12 months. If at the end of the 12 months you’re still unable to pay your debts, then they may be written off.
If you’re unable to repay your debts and you don’t own your home, then you may be eligible for a DRO. You may also be eligible if you’re income is low after you have paid your bills, and you haven’t had a DRO in the last six years.
Most debts are covered by a DRO, for example credit cards, loans, buy now pay later debt and arrears with utility companies.
If you’re in arrears with any child maintenance payments, you wouldn’t be able to get a DRO for this and you would still owe the money.
Having a debt relief order could affect you in many ways. Not all debt is covered by a DRO and you may still have to pay some debts after the debt relief order has ended. You won’t be able to borrow while you’re on a DRO and you may have difficulty getting credit in the future. A DRO can stay on your credit file for a long time after it has ended.
If you are in arrears with your landlord, even if you have a DRO, they could still take action against you.
If you’re struggling with debt and are considering an DRO, IVA or bankruptcy, then it’s always best to get professional advice. Money Helper or the Citizen’s Advice Bureau are all good places to get free help and advice.
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