How long does a Debt Relief Order (DRO) last?

21 May2021

Once you are accepted onto a DRO (Debt Relief Order), you will be given a one-year 'moratorium' on your unsecured debts. That means for one year, you will not have to repay your debts, your debts will not accrue any interest or charges, and you will be protected against legal action from your unsecured lenders.

Does the 'moratorium' always last for one year?

Usually - but not always. If your circumstances do not improve, your debts will basically be suspended for one year. After this period, if there is still no change, your outstanding unsecured debts will be written off.

If your circumstances do change, however, the DRO could be terminated early or extended. Your DRO could be terminated early if your circumstances change sufficiently, allowing you to make payments to your lenders. The DRO could be extended if your circumstances change close to the end of the DRO. Your moratorium period could be extended by up to three months to give you time to reach an agreement with your lenders.

Who will be approved for a DRO?

DROs are designed for people who have a low disposable, few valuable assets and relatively small debts, who need help to deal with their unmanageable unsecured debts. To get onto a DRO, you must meet all of the following criteria:

  • After your essential expenses have been paid for, you must not earn more than 50 per month.
  • Your assets must not total more than 300, with the exception of a car worth up to 1,000.
  • Your unsecured debts must not exceed 15,000.
  • You must be unable to pay the money back.
  • You must have lived or conducted business in England, Wales or Northern Ireland during the last three years.
  • You must not be involved in any other insolvency proceedings.
  • You must not have taken part in a DRO in the last six years.

If you aren't eligible for a DRO, but still need some help with your unsecured debts, click here to see the other debt solutions that might be available.

Are there any after-effects of a DRO?

There are a few consequences of entering a DRO. For example, your DRO will be visible on the Insolvency Register for the Order period, and up to three months afterwards. You credit rating will also be affected for six years.

Despite the drawbacks, if you are eligible for a DRO it may be one of the most quick and effective ways to get you out of debt.

If you're not sure whether a DRO is right for you, fill in our Solution Finder.

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Tags: debt, DRO, Debt Relief Order, unsecured debts, debt solutions, debt advice, credit rating, Insolvency Register

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