A Debt Relief Order (DRO) lasts a year. This is sometimes called “the moratorium period”.
At the end of this year, all the debts that were included in your DRO are wiped out.
You aren’t contacted at the end of the DRO year
There are no checks made at the end of this year by the Insolvency Service or by the debt adviser who set up your DRO.
You aren’t asked to provide any details about your income or savings at that point. Of course you should have informed the DRO Unit during the year if your income had gone up or you had received some money, but my point here is there is no “DRO Completion” check made at the end.
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 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. See DROs – what if my pay increases or I get a lump sum of money? for details.
These problems are all very rare – only about one per cent of DROs fail.
You would definitely know about it if one of them has arisen with your DRO. So if you haven’t heard of any difficulties, one year after the start date it is safe to assume your DRO has completed. And 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.
After it has finished, you will see a line saying something like:
Status Currently Subject To Debt Relief Order : Moratorium Period ended on 05 March 2019
Don’t panic about this! You aren’t subject to the DRO anymore, it is badly worded – 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 later lose your copy, you can tell a creditor who wants proof your DRO has finished to contact the Insolvency Service’s DRO team to get confirmation.
You no longer have to tell the Insolvency Service about changed circumstances
From this point on, you can win the lottery, inherit a house or get a big pay rise and you don’t have to inform the Insolvency Service.
You can now take money out of your pension. You can borrow money. Of course these may not be good financial decisions, but it’s up to you.
When does 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 it goes five years after your DRO finishes. You don’t have to do anything, this happens automatically.
At the end of a DRO, you will find it very hard to access any form of credit, but it will get easier as time goes on.
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 feel like the first time ever 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.