A debt relief order (DRO) is an insolvency solution for people with little to no assets and income. It must go through a DRO advisor, who will make an application on your behalf for a fee of £90. There are a number of criteria you have to meet to be eligible for a DRO, these are listed below. If you meet these and can get a DRO, you don’t have to pay anything towards your debts, and providing your circumstances don’t change during the 12 month DRO period, your debts will be written off.
Pros and Cons of a DRO
Benefits
- Alternative to bankruptcy
- Don’t have to pay anything for 12 months
- Debt written off after 12 months
- Protects from creditors during the 12 month
- Formal Solution without court appearance
Thing to consider
- Can only apply of you owe less than £20,000 (England and Wales) £15,000 (Northern Ireland)
- Cannot have a car worth more than £1,000
- Your details will be recorded on the public register.
- You may need to pay the insolvency service a fee if you qualify
- Your credit file will be affected
Fees
A DRO will cost £90. This is the amount charged by the Insolvency Service to process a DRO application.
For more information on Debt Relief Orders in England, Wales and Northern Ireland, click HERE
Debt Arrangement Schemes (DAS) – This is for Scotland only
A debt arrangement scheme (DAS) is a way management your personal debts which is available to residents of Scotland by the Scottish government.
Pros and Cons of a DAS
Pros
- Legal protection from your creditors which includes your home
- Prevents legal recovery
- Stopes future interest and charges from the date of approval and fully waived when your DAS is completed.
- Flexible to your circumstance which can be changed
Cons
- Your debt will need to be fully repaid which can extend the term
- Credit rating will be effected
- Interest may be re-added to the debts if you fail to complete your DAS scheme
- You cannot use further credit without approval from a DAS administrator
For more information on Debt Arrangement Scheme in Scotland, click HERE