What happens when a debt relief order is made?
When a debt relief order (DRO) is made, you enter a DRO period, which is normally a year. You may hear this called the moratorium. During this time there are certain restrictions on what you can do.
This page explains what happens when a debt relief order (DRO) is made.
A debt relief order period can't be ended early, unless the official receiver stops the DRO because you've broken the rules or have come into money.
Notification that your DRO application is successful
If your DRO application is successful, the official receiver will:
- send you a notice to say that the DRO has been made and outlining all the duties and restrictions that will be imposed on you while it is in force
- send a notice of the DRO to each of the creditors owed a debt that the DRO covers
- add an entry to the Electronic Individual Insolvency Register (EIIR) showing your details and the fact that a DRO has been made against you. If having your name on the EIIR could lead to violence against you or a member of your household, you can ask the court to order that your name doesn't appear on the register.
Payments you must keep making during the DRO period
The DRO period normally lasts for a year. During the period of your DRO you don't need to make any payments towards the debts listed in the order. The creditors of those debts won't be able to take any action against you.
There are some exceptions to this, which are:
- payments to your landlord for rent arrears. Having a DRO won't stop them from taking possession action against you, so if you want to stay in the property you may need to continue paying any arrears after the DRO is made
- payments to bailiffs, also called enforcement agents, who have taken control of your belongings through a controlled goods agreement. Having a DRO won't stop them from taking your belongings and selling them, so if you want to keep them you will have to keep paying the debt.
You'll also need to carry on paying your normal household expenses during the DRO period. These may include ongoing:
- council tax
- gas and electricity bills
- water charges.
You'll also need to keep paying off any debts that aren't included in the DRO.
Things you can't do during the DRO period
During the DRO period there are certain things you won't be able to do. These are called restrictions and include:
- getting credit for £500 or more without telling the lender you have a DRO
- carrying on in a business in a different name from the one under which you were given the DRO, unless you tell everyone you do business with the name in which you got the DRO
- being involved with promoting, managing or setting up a limited company without permission from the court
- acting as a company director without permission from the court.
If you don't follow these restrictions you will be committing an offence. This could lead to you being fined or even sent to prison.
If the official receiver finds out you've broken any of the restrictions or have been dishonest in your application, they can also ask the court to make a debt relief restrictions order against you. This would mean the restrictions could be extended for up to 15 more years. However, the DRO period will still end after twelve months and you won't usually have to pay off any of the debts included in the order, unless you got the debts through fraud.
If your circumstances change
If your circumstances change during the DRO period, you must tell the official receiver. These changes may include:
- anything which you realise is wrong on your application or you missed out from the information you gave
- any increase in your income
- any additional money or valuables that you acquire, such as money left in a will.
If you fail to tell the official receiver of a change in circumstances like these, you will be committing an offence. This could lead to the DRO being taken away from you and would mean you would have to deal with your debt situation in a different way. It could also lead to a debt relief restrictions order made against you, and could result in you being fined or even sent to prison.
You can't add any new debts or debts that you forgot about to the DRO.