One of the biggest advantages of a Debt Relief Order (DRO) is that it is a formal, legal debt solution. It prevents unsecured creditors taking any further action against you for debts that are included in your DRO:
- you can’t be taken to court for a CCJ (or a Liability Order for council tax arrears);
- if you already have a CCJ, the creditor can’t send the bailiffs in – and debt collectors should not suggest that they can do this.
Your DRO doesn’t actually get rid of your debts until it is completed after 12 months. During this time it can be cancelled, for example if you get a large pay rise or inherit some money. So your creditor is allowed to send you a statement of what your debt is during the DRO period, but they can’t say you should make a payment to them. And they shouldn’t be phoning you about it or calling round if they are a doorstep lender.
If you are thinking about a Debt Relief Order, you shouldn’t worry that you will still be chased for your debts – problems in this area are extremely rare. Find out more about DROs and whether one might be right for you.
The first few weeks
You may still get phone calls, receive letters or visits from doorstep lenders in the first few weeks after your Debt Relief Order starts. Usually this is because the firm hasn’t received the notice of the DRO yet, or the news hasn’t been passed down to the person contacting you.
Tell them that you have started a DRO, give them the date and your DRO number. 99 times out of a hundred, they won’t bother you again.
The creditor says my debt isn’t included in my DRO
Was the debt listed on your DRO? If you are unsure, contact the person who helped you set the DRO up and they will be able to help you. It doesn’t matter if your debt has been sold to a different debt collector after the start of your DRO, it is still included in your DRO if it was listed.
What if debt collectors continue to call?
You could ignore them because they have no legal power to do anything – but if you get any court papers about the debt do not ignore these as it is simpler to stop a CCJ being issued rather than get it removed afterwards, see What to do if You Get a Claim Form.
Or you can complain. I recommend complaining! You may be able to simply shrug and put the phone down, but some other people might be more vulnerable – by reporting them you will help to stop these bullying tactics. It will also stop any possible problems with CCJs later. There are three main people to complain to:
- the debt collector
- the Financial Conduct Authority
- the Financial Ombudsman.
Write to the debt collector
Email or write to the firm along the following lines, including the word COMPLAINT prominently:
Report them to the Financial Conduct Authority
The FCA is the regulator for consumer credit. The FCA won’t investigate your specific complaint and get back to you, but it will be passed to their supervisory staff who can take action against the firm. They can fine or even take away the license from a firm that breaks their rules. It is very simple to report a firm: just email the FCA at: email@example.com Your email could look something like this:
Complain to the Financial Ombusdman (FO)
The FO will investigate your specific complaint and get back to you about it. Before going to the FO, you must have complained in writing to the firm. If the firm rejects your complaint or doesn’t reply within 8 weeks and they continue to try to get payments from you, use the FO’s complaints procedure – it is simple and user-friendly.
Prevent problems arising after the end of your DRO
After the end of your DRO, your debt is wiped out. Very occasionally your “debt” (that is in quotes because you no longer legally owe any money!) may be sold to a different debt collector who contacts you asking for payment. You should still use the above letters to complain about this.
One way to minimise the chance of this happening is to follow the steps in Repair Your Credit File once your DRO has finished. This will make sure that all the debts in your DRO have been correctly marked as settled/satisfied with no money owing.
IVAs and bankruptcy
The FCA rule quoted above also covers IVAs and bankruptcy. Here too you may get some contacts for a few weeks, but after that they should stop. For an IVA, you should also complain to your Insolvency Practitioner – your IVA is binding on all your creditors, not just the ones that voted to approve your IVA. For bankruptcy, also complain to the Official Receiver.