A Debt Relief Order (DRO) lasts a year – this is sometimes called “the moratorium period”. At the end of this year, the debts that were included in your DRO are wiped out.
Most people expect to get a certificate from the Insolvency Service or an official letter from the Official Receiver at the end of a DRO, but nothing arrives! This is normal – the letter hasn’t got lost in the post and it doesn’t mean that anything has gone wrong with your DRO.
What can stop a DRO completing successfully?
There are a few things that can go wrong:
- evidence may emerge that your debts were larger than the maximum £20,000 limit (this was £15,000 until October 2015) or that you had more than the permitted asset or surplus income level when you started the DRO;
- you may break one of the “DRO restrictions”, see this National Debtline factsheet;
- your income may rise or you may inherit money or get another windfall that increases you assets. This won’t always mean your DRO fails – as this post explains less than 1 in a hundred DROs fail because of this.
These problems are all very rare and you would definitely know about it if one of them has arisen with your DRO. So if you have’t heard of any difficulties, at the end of the year it is safe to assume that your DRO has finished without problems and that you no longer owe the debts that were included in it.
Check the Insolvency Service register
The Insolvency Service keeps a register of everyone who has a DRO – this will show the date your DRO ends. The entry doesn’t say “end date” specifically, instead you should see a line saying something like:
Status Currently Subject To Debt Relief Order : Moratorium Period ended on 05 February 2017
That word “ended” means your DRO has completed on the date given.
The record will remain for three months after this date. If you check the register again at the end of the three months your name should no longer appear.
It’s a good idea to access your record and print it off during this three month period – you can then show this to any creditor that is disputing whether your DRO has finished. If you don’t print off the record in time, or you lose the print out, you can tell a creditor who is disputing that your DRO has finished to contact the Insolvency Service’s DRO team to get confirmation.
Will your credit record improve?
It takes time for your credit record to recover from a DRO. The record of the DRO itself will remain on your credit file for six years in all – so five years after your DRO finished.
At the end of a DRO, you will find it very hard to access any form of credit, but it will get easier. You can make this faster by going through a “clean-up” process on your file. This makes sure that the default dates for all your debts are on or before the date your DRO started and that after your DRO finishes, the balances owed are all set to zero and the debts marked as settled or partially settled.
Avoiding debt problems in future
Getting debt-free can seem almost magical at first – it may the first time in your adult life that you don’t owe anyone any money. But there are a lot of pressures these days that make it hard to stay out of debt. One very positive thing you can do is to start saving an emergency find, no matter how small. And if you can save it in a Credit Union, then if you ever do need to borrow money then the Credit Union is more likely to give you a loan at an affordable rate of interest.