Debt Relief Order
In debt solution terms, the Debt Relief Order, or DRO, is the new kid on the block.
It was introduced in UK law in 2009 to provide a cheaper formal alternative debt solution to bankruptcy, for those people who are experiencing difficulties repaying their unsecured debts.
The DRO is only available to a very narrow band of individuals.
They must have been living in England, Wales or Northern Ireland for the last 3 years. They must also have debt levels under £30,000 for those living in England and Wales or under £20,000 for those living in Northern Ireland.
They must be struggling to afford their debt repayments to the point where they cannot afford more than £75 towards the monthly repayment of their debts.
They must also have no assets of higher value than £2,000 for those living in England and Wales, or £1000 for those living in Northern Ireland, with the exception of a motor vehicle, which must be less than £2,000 in value.
A DRO is a total debt solution, which means it will remove the debt burden permanently. And it does this for a fraction of the costs of bankruptcy.
There are no repayments to be made with a DRO. Once the £90 fees have been paid to the intermediary the ongoing liability to the debts in the DRO are removed.
On successful completion of 12 month DRO term, all debts are written-off and the debtor is legally debt free.
The main downside to a DRO is the damage caused to the debtor's credit rating. As with all debt solutions, the damage lasts for 6 years and during this time it will be very difficult for the debtor to obtain further credit.
Also, similar to bankruptcy, creditors do have a right of redress if they feel an application is fraudulent or if a windfall is received during the DRO.
For more information on the bankruptcy solution read -