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What happens During a Debt Relief Order or DRO?

A DRO or debt relief order is designed for individuals with low income, few assets and a reasonably low debt level. This means if you own a home or an estate, you cannot qualify for a DRO. Also, you wouldn’t be eligible if you have more than £50 left each month after meeting your essential living costs.

Once your DRO or debt relief order is approved you will have to be aware of the restrictions associated with it. Additionally, you will be protected from your creditors once your DRO starts.

What are the restrictions on during a debt relief order or DRO?

You are restricted to do certain things while you’re on a DRO. The following restrictions include:

  • You’re not allowed to take out credit amounting to more than £500 without informing the lender you’re on a debt relief order or DRO
  • Continue trading under a different name without informing the public that your previous business was under a DRO
  • Act as a company director without letting the court know
  • Set up a limited company without the court’s permission

Debt Relief Restriction Undertaking or Order

If the Insolvency Service finds out that you have acted dishonestly, or committed fraud, they can apply for a debt relief restriction undertaking (DRRU) or debt relief restriction order (DRRO) . This can extend the DRO restrictions for up to 15 years.

How long does a DRO last?

A DRO can last for 12 months, which is called the moratorium period. During the moratorium period, your creditors or lenders cannot take further action to recover the debts that are under your DRO.

Though your creditors can still keep you posted of how much you owe, they cannot request for any payments during this time. Besides, they cannot take court action against you. If they will, you have to inform them that you are on a DRO. Once they threaten or insist payments you can contact the Insolvency Service and inform them.

After the moratorium period and there are no changes with your circumstances, your debts under the DRO will be written off. This means you still have to pay the debts or arrears that are not included in your DRO.

What can happen if my situation change during a DRO?

You have to inform the official receiver once there are changes with your situation. For instance, if your income has improved or when you’re able to obtain a lump sum of money or assets.

Where is my DRO or debt relief order be recorded?

Your name, address and DRO details will be registered in the Individual Insolvency Register (IIR) if you live in England and Wales. This can remain for 12 months and can be removed three months after the end of your DRO.

If you reside in Northern Ireland, your information is registered in the DRO registers. Whether if it’s cancelled or revoked, your information can stay on file for a total of 15 months.

You can apply to have your address removed in the Individual Insolvency Register or DRO register in cases that it can put your safety and security at risks.

Will a DRO affect my job?

DRO may affect your job if your contract indicates that you cannot be insolvent. You can check your HR or your employment contract to find out whether it can impact your job. Also, check our guide on: How Will A Debt Relief Order Affect Me?

Can a DRO be set aside or cancelled?

If determined that you have been dishonest or acted fraud on your DRO application, the OR can terminate your application. This is the reason why you have to keep the official receiver or OR informed regarding your situation.

Advice on DRO from DRO Specialists

If you’re thinking of applying for a DRO or debt relief order, we can help you. Our online debt remedy tool can give you useful advice on how you can deal with your debt troubles. You can also speak to our debt specialists on 0800 193 1024.