A DRO provides 12 months of debt relief, but how does it impact your ability to get credit afterward? This guide explains what a DRO is, what happens during and after it, and how long it affects your credit report. We’ll also cover how a DRO impacts your credit rating and future access to loans, credit cards, and mobile phone contracts.
what is a debt relief order?
First of all, what is a debt relief order? When we talk about a DRO, we’re talking about a product that is suitable for:
- Debts up to £50,000
- Your car/vehicle is worth less than £4,000 (or you don’t own one)
- Your other assets total less than £2,000
- You have less than £75 to spend each month after bills
A DRO is free to set up and allows you to stop making payments completely for (usually) a period of 12 months.
At the end of that time, if you still cannot pay your debts, anything you still owe as part of your DRO will be written off.
how will a DRO affect me?
A DRO will be listed on the public insolvency register for up to six years, so anyone can see it. It will also affect your credit rating for the same period, which might make it harder to get new credit, like overdrafts or phone contracts. This could lead to needing more costly pay-as-you-go options. It’s important to get professional debt advice before deciding on a DRO.
what happens on a DRO?
A Debt Relief Order (DRO) pauses your debts for up to 12 months. During this time, you don’t make payments, and creditors stop contacting you. At the end of the year, any remaining debts are usually written off, though not all debts qualify.
If your situation improves and you can start repaying, the DRO can be cancelled. You might then have to pay fees and interest, but the DRO gives you temporary relief from payments.
what happens after a DRO?
To put it another way, how long does a DRO take to process? In total it takes 12 months to fully discharge a DRO and you will not be notified when the end date arrives.
You should make a note of the end date and keep it in a safe place (or several safe places) as knowing your DRO has ended can allow you to start rebuilding your credit rating.
The Insolvency Service register should show the end date of your DRO, but this will be removed three months after that date arrives – so again, keep a copy of the notice if you want proof.
the DRO moratorium period
You may see references to the ‘DRO moratorium period’. This is just the 12-month term of the DRO we’ve already talked about above.
A ‘moratorium’ is a temporary pause and is often used when talking about postponing debts. The important thing is to know when your DRO moratorium period is due to end.
DRO and your credit score
A Debt Relief Order (DRO) stays on your credit report for six years from the start date, which is five years after the DRO ends.
So, can you get credit after a DRO? Yes, but it might take time. Debts covered by the DRO will remain on your credit report as unpaid or unsettled until the DRO is removed.
In the meantime, maintain a healthy credit score by avoiding new bad debts, keeping up with any repayments not covered by the DRO, and managing any overdrafts or credit cards responsibly.
DROs and contact for creditors
Creditors usually should not try to contact you about debts covered by a DRO. If they call you, you can politely remind them about the DRO and refuse to discuss the debt.
There are some exceptions to this, including:
- Debts not included in the DRO
- Debts covered by a controlled goods agreement
- Mandatory contact required by the Consumer Credit Act
- Rental arrears and repossession proceedings
- To give you information about your account
If you think a creditor is harassing you in a way your DRO is designed to prevent, speak to your debt adviser about how to take action.
DROs are designed to offer relief from your debts. All parties should honour that – so if you need 12 months’ breathing space from your monthly repayments or you feel harassed by your creditors, contact Care About Money.
