Notice of defaults: everything you need to know
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If you're eligible for a Debt Relief Order (DRO) it could write off your unaffordable debts after one year. However, it will also damage your credit rating.
That's one reason it's important to know all the facts before deciding whether a DRO is right for you.
To put it simply: yes. A DRO (Debt Relief Order) will damage your credit rating for six years. During this time it's likely that you'll find it more difficult to borrow money. After the six years have passed, the DRO will disappear from your credit record and your credit rating should start to improve.
You shouldn't let this put you off the idea of a DRO, though. If you really need to enter a DRO, it could help you to clear your unaffordable unsecured debts, like credit cards, overdrafts and payday loans.
And remember, the consequences of ignoring your problem debts could be even more serious. It's important to look at all the potential pros and cons before you decide whether a DRO is right for you. One of our expert debt advisers could help. Just fill in the form below to talk to one of them about your situation:
Is a DRO worth it?
The idea of a damaged credit rating can be off-putting. However, if you're really struggling with your debts, the advantages of a Debt Relief Order could outweigh the disadvantages.
If you're eligible for a DRO, your problem debts will be frozen for a year. You won't make any payments towards them and interest and charges will be frozen. Your lenders won't be able to take any legal action against you either.
After a year has passed, your finances will be assessed again. If things have not improved enough for you to resume payments towards your debts, they will be written off. And although this damages your credit rating, it can relieve a lot of strain on your finances.
Just remember, the criteria for DROs are very strict. You have to have very few valuable assets and a low disposable income each month (less than £50) - among other things.
If you're not eligible for a DRO, don't worry. There are a range of different debt solutions out there that could help you. Talk to a debt expert for more information.
by Emily BancroftBack to blog home