New rules on credit card debt: what do they mean for me?
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A Debt Relief Order usually lasts one year, after which your unaffordable unsecured debts will be written off. However, it could last longer if your circumstances change.
If you're struggling to repay your debts, a Debt Relief Order may be able to suspend your payments for twelve months, including interest and charges. Following the completion of a DRO, if your financial situation hasn't improved and you still can't afford to repay your unsecured debts, they will be written off.
How long will it last for?
A DRO usually lasts for twelve months. If your financial situation doesn't change for the duration of the DRO, your unsecured debts will be written off after that time. However, if your financial situation improves dramatically during the agreement, it may be terminated early because you can afford to pay your lenders.
Your DRO could also be extended by up to three months should your financial situation change towards the end of the agreement.
Will I qualify for a DRO?
If you have a low disposable income and few valuable assets, you may qualify for a DRO. You have to meet all the criteria below to qualify:
• Your unsecured debts must not be more than £15,000.
• You must be completely unable to repay your lenders in full.
• You must not have more than £50 disposable income per month.
• Your assets must not be more valuable than £300 (except for a car, which can be worth up to £1,000).
• You must not be involved in any other insolvency proceedings (such as an IVA).
• You must not have had a DRO in the past six years.
• You must have been a resident of (or conducted business in) England, Northern Ireland or Wales during the last three years.
If you've found you don't meet the criteria for a DRO, there may still be a suitable solution for you, and you can find out more by filling in the debt solution finder below.
Are there any downsides?
It's important to remember that a DRO is only available to those with serious debt issues, and as such the impact on your credit rating will be quite significant. Your Debt Relief Order will also appear on the Insolvency Register for up to three months afterwards.
For more information about the Insolvency Register, click here.
These drawbacks may sound serious, but the consequences of not finding a solution to your debt problems could be much more severe. If you're struggling with debt, speak to one of our expert advisers on 0161 605 4810 and we'll help you find the right solution.
by Sarah SymonsBack to blog home