DRO - good points vs bad? Advice please!

Kitty28
Kitty28 Posts: 2 Newbie
in Bankruptcy & living with it
Hi all,

I'm new here so sorry if there's already a post on this.
I'd like to know the good and bad points of a DRO. I'm in debt, but it's silly amounts here and there and there's quite a few. With Lowell alone I have 6 debt accounts.

I do want to get the debts all paid off, but my problem is I'm off work ill at the moment and I don't think I will be able to go back to my job (I have a pain disorder), so I'm worried that I could start paying these debts off, then be out of work for months until I find another job, and have to miss payments and therefore be no further forward. So I'm thinking about a DRO. I'd love to hear from people who have had one and what your opinion is on the good v the bad points.

Thanks :)

Comments

  • sourcrates
    sourcrates Posts: 28,870 Ambassador
    First Anniversary Name Dropper First Post Photogenic
    Hi,

    No bad points at all really, your credit file won’t be pretty for 6 years, but that’s the same with all debt solutions.

    Do you meet the eligibility criteria ?

    If so, and your situation is unlikley to change for at least 12 months, then go ahead, read up on them as much as possible first, as they can be a good choice for certain people.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    First Anniversary Name Dropper Photogenic First Post
    Good points
    It 'does what it say's on the tin' provides relief.
    You know there is an end date.
    You can avoid needing to have supplementary benefits.
    (Though appreciate the system now isn't really anything left to speak of)
    It is better then CCJ's and burying the head.
    It makes you want to better yourself.

    Bad points
    It is not over in a year.
    It can affect you in work and your career choice.
    Any recourse you may later have with creditors is null.
    It can stop a pattern of borrowing. Instantly.
    It might mean a new bank account.
  • National_Debtline
    National_Debtline Posts: 7,998 Organisation Representative
    First Post First Anniversary Combo Breaker
    Hi Kitty28 and welcome to MSE,


    If you have not yet had full advice on a DRO, then I would suggest you call one of the free debt charities about it. They will explain the different aspects of a DRO and then you can decide which elements are good and bad to you. We do have a factsheet that may also help - https://www.nationaldebtline.org/EW/factsheets/Pages/debtrelieforders/droadvice.aspx

    The basics of it all are, that a Debt Relief Order (DRO) is a way to get the debts written off for people who owe less than £20,000 of debt, have less than £50pcm available for the debts and have less than £1000 worth of assets (plus you are allowed to have a car that is also worth up to £1000). You must meet this criteria for the DRO to be started.

    And a DRO means that for 12 months you do not pay your debts, you would have restrictions placed on you during this time (known as a moratorium), and if after the 12 months you are in the same financial position (i.e. that you still have less than £50pcm for your debts), the debts are written off and you are no longer liable. It is a form of insolvency and can affect other things, such as some private tenancies, employments (within certain industries) and even immigration status. It costs a one off fee of £90 (there are some charities that can help with this), it is very damaging to your Credit Reference File and you must meet the rules for the full 12 months for it to complete successfully. If your surplus fluctuates over £50 per month during the 12 months then the DRO may be cancelled and the debts can chase you again. This is just something to be mindful of if you return to work. You can also only have 1 DRO per 6 years. Best of luck,


    Laura
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
  • fatbelly
    fatbelly Posts: 20,481 Forumite
    Name Dropper First Anniversary First Post Cashback Cashier
    Good

    Low fee - payable in instalments
    advice from trained intermediary
    no ongoing payment - even if you get rich during the moratorium
    discharged after 12 months
    likely keep bank account
    likely employer not informed
    car up to 1k effectively invisible
    savings/captital up to 1k ignored
    can still have small monthly surplus
    DLA/PIP ignored

    Bad

    some debts excluded
    only debts listed will be written off
    cannot have another one for 6 years
    20k limit too low for some
    mark on credit file for 6 years
    can lose DRO if circumstances change in the 12 months
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