How-Long-Does-A-DRO-Last-Consumer-Debt-Help

How Long Does A DRO Last?

If you are in the process of getting a DRO or debt relief order, you will want to know what impact this will have on your finances or credit report.

To start with, a debt relief order can be a very helpful way to deal with your debts and potentially avoid bankruptcy. You will have to apply through an intermediary, such as National Debtline or StepChange, who will apply on your behalf. But what are the consequences if you are successful and how long does a DRO last?

Table of contents:

    What Is A DRO

    In simple terms, a DRO (or debt relief order) is a way to clear your debts. Generally speaking it’s useful if you have a relatively low level of debt and not many assets. To be eligible, you must meet the following criteria;

    • your debts are £20,000 or less
    • you’ve not had a DRO in the last 6 years
    • you’ve lived or worked in England or Wales in the last 3 years
    • you’re not a homeowner
    • you have limited spare income (less than £50 to spend each month, after tax, national insurance and household expenses)
    • your assets are worth no more than £1000 total

    How Long Does A DRO Last

    Typically, a DRO lasts for about 12 months. So during those 12 months, you won’t have to repay certain debts. However, not all debts are covered by the DRO, so it will be specific to your situation.

    At the end of the DRO time, any debts included within the order are written off or discharged. Which means you won’t have to pay them at all. However, if you still have debts which are not within the DRO order, then your creditors can legally pursue you for these.

    Bear in mind that if you think a DRO will help you clear some debts, then it takes around 12 months to process. So you can’t just apply and expect relief immediately. However, during this time you’ll be in a ‘moratorium’ period, which means that lenders shouldn’t chase you.

    What Types Of Debt Are Covered

    Debts within a DRO are called ‘qualifying debts’. During your DRO, creditors can’t ask you to make payments. These debts include;

    • credit cards, overdrafts and loans
    • arrears with rent, utility bills, telephone bills, council tax and income tax
    • benefits overpayments
    • hire purchase or conditional sale agreements
    • buy now – pay later agreements
    • bills for services like vets or solicitors
    • debts you owe to friends and family
    • business debts

    I’m In Debt With Rent, Does This Count

    If you are behind on your rent and in debt to your landlord, then get in touch with them as soon as possible to try to come to an agreement. Perhaps you can pay a smaller amount for a few months or perhaps you need time for your salary to be paid.

    When it comes to a DRO, rent arrears can be included. However, even if they are in your DRO, your landlord can legally still take action to evict you. Which means you may have to continue paying the arrears after a DRO is made.

    What Isn’t Covered?

    A debt relief order only covers certain debts. That’s why it may not be the right solution for you. For example, you still need to pay;

    • magistrates court fines and confiscation orders relating to criminal activity
    • child support and maintenance
    • student loans
    • social fund loans
    • compensation for death and injury

    What If Circumstances Change

    Sometimes you may find that during the 12 months that a DRO is in place, your financial situation or circumstances change. So what happens next?

    The decision to grant you a DRO is based on your circumstances at the time you apply for it. Hence if these change, you have a duty to tell the official receiver.

    For example, you might be offered a new job with a better salary within the time frame that your DRO exists. This means you could be in a situation to pay back more on your debts. Or another example is if a close member of the family dies and leaves you a sum of money or an asset in their will. It’s your duty to report this as it changes your financial situation.

    If you’re in doubt, contact your intermediary and talk through what’s happened. They will be able to advise you on the next steps.

    Remember, if you don’t report your change of circumstances, then you may be charged with a criminal offence which can lead to a fine or even prison.

    What Happens After A DRO Order

    Your debt relief order ends 12 months after the date it was approved. After this time, if your situation has not improved, the debts included in the DRO are written off. However, the impact of the DRO can last much longer.

    A DRO stays on your credit file for six years. This may make it difficult to take out credit during this time.

    Furthermore, your DRO is put onto the Individual Insolvency Register, which is an online database about bankruptcies, IVAs and DROs. Once your details are on, they stay in the database during the 12 months of your DRO and 3 months after it ends.

    It means that if you are going for a new job, applying for loan or a deposit on a house, then lenders or employers can check your credit file and make a decision on whether or not to loan you the money. Obviously having a DRO on your file will draw attention to your financial situation.

    Conclusion : How Long Does A DRO Last

    In summary, if you think that a DRO is the right option for you to help clear your debts then it’s worth applying for. You can speak to a debt adviser for free to explore any other options too.

    However, a DRO stays on your credit report for up to 6 years which could make it harder for you to apply for certain loans or financial support. Furthermore, if you need to apply for another DRO, you can’t do this until 6 years are over.

    During those 6 years on your report, you can try to improve your credit rating by paying off your debts on time and keeping your bills up to date. This will show a lender that you are working hard to keep on top of your financial situation now.

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