Rent arrears are a common issue faced by many tenants, especially during uncertain times like we are experiencing now due to the COVID-19 pandemic Falling behind on rent payments can have serious consequences, including the risk of eviction However, for tenants struggling with rent arrears, there may be a solution in the form of a Debt Relief Order (DRO).
A Debt Relief Order is a form of insolvency that helps individuals struggling with debt to manage their finances and eventually become debt-free It is a legally binding agreement that allows debtors to have their debts written off after a specified period, usually 12 months DROs are suitable for those with relatively low levels of debt, little to no assets, and no surplus income to repay their debts.
So, how can a DRO help tenants who are facing rent arrears? Let’s explore the benefits of a DRO for tenants in this situation.
1 Legal Protection
One of the key benefits of a DRO is that it offers legal protection to the debtor Once a DRO is in place, creditors included in the order cannot take any legal action to recover their debts This means that tenants facing rent arrears will be protected from any further action by their landlords or letting agents, giving them some breathing space to get their finances in order.
2 Debt Write-Off
One of the most significant advantages of a DRO is that it allows debtors to have their debts written off after a specified period, usually 12 months This means that tenants struggling with rent arrears can have these debts included in the DRO and eventually have them written off, giving them a fresh start financially.
3 Affordable Debt Solution
Unlike other debt solutions, a DRO is relatively affordable, making it an attractive option for tenants facing rent arrears The cost of applying for a DRO is currently £90, which is considerably lower than other forms of insolvency, such as bankruptcy dro and rent arrears. This makes it a viable option for tenants with limited financial resources.
4 No Ongoing Payments
Another advantage of a DRO is that debtors are not required to make any ongoing payments towards their debts during the period of the order This can be particularly beneficial for tenants struggling with rent arrears, as it gives them some financial relief and allows them to focus on other essential expenses like food and utilities.
5 Debt-Free Future
Ultimately, the goal of a DRO is to help debtors become debt-free and regain control of their finances For tenants facing rent arrears, a DRO can provide a pathway to resolving their financial difficulties and avoid the risk of eviction By successfully completing the DRO, tenants can start afresh and rebuild their financial stability.
It is important to note that a DRO is not suitable for everyone, and there are certain eligibility criteria that must be met Individuals must have debts of less than £30,000, assets of less than £2,000, and disposable income of less than £75 per month to qualify for a DRO Therefore, it is essential for tenants considering a DRO to seek advice from a debt advisor to determine if it is the right solution for their situation.
In conclusion, a Debt Relief Order can be an effective solution for tenants facing rent arrears By providing legal protection, debt write-off, affordability, no ongoing payments, and a pathway to a debt-free future, a DRO offers a lifeline to tenants struggling with debt If you are a tenant experiencing rent arrears, it may be worth exploring the option of a DRO to help you get back on track financially.