What Happens after a Debt Relief Order (DRO)?

November 13, 2014

Luke-Notley small (Custom)A Debt Relief Order is a way for you to have your debts written off if you owe less than £15,000 and are on a low income or have few assets. It is considered a low cost alternative to bankruptcy. The DRO will last for 12 months and if, after this period of time, your circumstances have not improved then your debts will be written off, making you debt free.

The application fee for a Debt Relief Order is £90 and is settled just before your application is submitted to the Insolvency Service. This fee can be paid in instalments; however, until the amount is paid in full your DRO will not take effect.

What is Included in a DRO?

This is not something that should be entered into lightly, but if after paying bills you have less than £50 a month remaining it may be the best route for you to take. All unsecured debts will be taken into consideration for a DRO and this includes any arrears on rent or bills.

If your situation changes within the 12 month period your case will be reassessed. If you still meet the criteria then your DRO will continue. If your finances have improved, however, then you will have to recommence payments of your debts.

Once your DRO has started you can’t add any new debts to it. Debts such as student loans, court fines and child support are not covered by a DRO.

What Happens If a Creditor Tries to Collect a Debt Covered by a DRO?

During your debt relief period of 12 months, creditors are unable to contact you or try to collect payments that you owe them. If, once your DRO period is over, your creditor tries to collect a debt that was covered by your DRO then you can challenge them and do not have to pay. Never feel threatened into paying this money back and always ask your DRO advisor for advice if you are unsure.

If a creditor does not accept or believe that your debt is covered by your DRO OR if they do not believe that your DRO period has ended, you can send them a copy of your entry from the Insolvency Service Register. If you do not have a copy of this form you can ask your creditor to contact the Insolvency Service’s DRO team who will confirm your DRO is in effect or has ended and that they cannot take action against you over it.

What Happens After the DRO Period?

After the 12 month DRO period, any debts listed on your order will be written off. You will not receive any official notification of this. If you are unsure of when your DRO ends then you can check with the Insolvency Service’s register. You will only have to pay off any debts NOT included in the DRO.

You can only apply for a new DRO every 6 years, but remember that your credit rating will be severely affected within this time. You may not even be able to open a bank account due to a low credit rating. Only certain prepaid bank accounts will be accessible to you within this time.

For more information, or to find out if a DRO is suitable for you, visit the InControl homepage or call our dedicated customer services team on 0800 072 6623.