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Debt Relief Order UK
DRO is the abbreviation for Debt Relief Order. It is a way to get the debts written off. This is only if the levels of debts are low and if one has only a few assets.
If a debtor qualifies for a DRO, a few of the financial institutions are willing to initiate action with their DRO teams. They apply to the Insolvency Service on the debtor's behalf.
As a part of the procedure followed, debt repayments and interests are frozen for 12 months. If the debtor’s financial position does not change during this time, all of the debts included are written off.
The financial organization, whose aid the debtor takes, must be approved to help the debtor apply for DRO if he is eligible.
Frequently Asked Question
Pros of DRO
DRO can be a low-cost option to bankruptcy.
You don’t pay anything against our debts for the next 12 months later on that would be written off.
Creditors can't ask you for debts during the 12 month period.
DRO is a proper debt solution; you don't have to appear in court.
Cons of DRO
You can’t apply for DRO if you’re a homeowner.
You are eligible for DRO only if you borrow less than £20,000 and reside in England, Wales or Northern Ireland.
DRO one of the risk is that will appear on a public register and also affect your credit report negatively.
Let us now consider How assets lay an influence over DRO:
DRO is essentially designed for debtors who have few assets. Valuation of assets is done in terms of how much money they would raise if sold in current condition, and not the value for which they were purchased.
Household items like furniture and bedding neither count as assets or tools are essential for a job. The total worth of assets cannot be more than £1,000 in order to qualify for a DRO. One can own a domestic vehicle worth up to £1,000 apart from these assets.