The truth about bankruptcy
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Thinking or entering into a DRO, but not sure how long it lasts? Find out here.
When you’ve got unmanageable debts, you may be tempted to think about debt solutions to help you get back onto an even financial keel. If you do, you really need to know how they last before making any decisions about what you think is appropriate and what you’d like to choose.
In the case of a Debt Relief Order, or DRO as it’s usually known, there’s a very strict time limit for when it ends. And that time limit is after 12 months have passed. If at this time, the official receiver (OR) – the person who deals with your DRO – sees that your situation hasn’t changed, any of the outstanding debts that were included in the DRO will be written off.
Ending the DRO early
If you suddenly find yourself in a much better financial position, for instance you inherit enough money to start paying off what you owe or you get a new job that pays more than your previous role, you’ll no longer meet the DRO criteria and your DRO will be revoked. This means it no longer exists and you’ll either have to find another debt solution or work out a deal with your lenders. Your debt advisor can help you with this.
Restrictions once the DRO is in force
Once the DRO is in force, there are some other restrictions you’d need to follow, for example not trying to obtain credit over £500, acting as a company director, apply for an overdraft without telling your bank or building society about your DRO.
If you were found to be breaking the rules of the DRO, the official receiver can apply for a Debt Relief Restriction Order (DRRO). This will extend the restriction placed on you for any period between two and 15 years, with the majority ending after 5 years. But don’t worry, all the rules will be fully explained to you before you enter in the DRO. And if you were ever unsure as to whether something you were doing was allowed or not, you could speak to a debt advisor or the OR to find out.
It is important that we also point out that while debt solutions may seem like the end of your money worries, they do come with some severe short and long term consequences. One of these can be damage to your credit score, which can affect your ability to borrow in the future, or make borrowing very expensive. So, before you decide on anything, we’d advise that you talk through the options available with a trained debt advisor.
You can get free impartial advice from Money Advice Service, or you can contact one of our trained debt advisors using one of the ‘contact us’ options on the left hand side of the page.
by Shelley BowersBack to blog home