My prospective tenant has admitted that they have had a debt relief order. I have no idea what this is or how it will impact their referencing. Any idea?
A debt recovery order (DRO) is a way to have debts written off – it is considered a ‘cheaper alternative’ to bankruptcy and is designed to assist with people with few assets, and a low level of debt. The individual will apply for the order, which, if successful means that they pay nothing towards their debt for 12 months, after which they will be written off. Their creditors are unable to pursue them and they do not have to appear in court.
Someone is eligible for a DRO is they live in England, Wales or Northern Ireland – in Scotland a similar scheme known as a Minimal Assets Process. The individual must have owed less tat £20,000 at the time of applying for the DRO and must own less than £1000 worth of assets. They also need to have less than £50 surplus income a month.
With regards to the impact such a process has on your tenant, the DRO will appear on their credit rating, and is likely to have a negative impact on a reference. The ‘trace’ of the DRO will remain on the individual’s credit file for six years, so dependent on when the DRO was undertaken, it may not have such an impact any more.
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