If your situation doesn’t change, a DRO usually lasts for twelve months. At the end of that time, your DRO will end and the unsecured debts will be written off.
If your circumstances do change, the DRO may be revoked. For example, if your situation has improved before the end of the DRO, you may be required to resume making debt repayments – or you may need to look at a different debt solution.
Will interest and charges be frozen?
Your lenders are entitled to accrue interest and charges during the 12-month period that you are not required to make any payments (the ‘moratorium’). If your circumstances do not change, then you will never be asked to pay those back.
If your circumstances improve however, or if the DRO is revoked (fails) for any reason (for example, if you don’t co-operate with the Official Receiver), the balance you owe will include the interest and charges accrued during the moratorium, so you could be left with a larger balance than when it was originally set up, as a result of those additional interest and charges.
How do I know if I qualify?
You'll only be eligible for a DRO if you genuinely can't afford to repay your unsecured debts. You must also meet the following criteria:
- Your unsecured debts must not be more than £20,000
- Your monthly disposable income must be less than £50 after living costs
- The value of any assets you own must be less than £1,000. Assets include things like jewellery and expensive electrical equipment. You can also own a vehicle worth up to £1,000.
- You have lived or worked in England, Wales or Northern Ireland (if applying for a NI DRO) within the last three years
- You have not applied for a DRO in the last 6 years
- You are not already bankrupt or in an Individual Voluntary Arrangement