Debt Relief Orders

If you are able to qualify for a DRO, there are some consequences which you will need to be aware of, which may affect how you feel. In reality, these consequences will be nowhere near as bad as the initial debt for many people that DROs are targetted at.

The first things is pretty positive for the DRO applicant: a “moratorium” period on the debts covered by your DRO. This is a 12 month period where you creditors cannot take any action to recover or enforce their debts against you. After that time, the debts concerned are discharged.

If your situation changes, however, and you are in a position to make payments to your creditors, then the official receiver can consider whether to terminate the DRO or not. If the chnage of circumstances is clsoe to the end of the 12 month period, then the official receiver can extend the DRO for up to 3 months to allow you to come to an arrangement with your creditors. You are still protected during this extension time.

If a DRO is granted by the official receiver, then they will notify all of the creditors listed that a DRO has been made, and that they cannot recover the debts you owe them.

Restrictions

There are some restrictions, in return for clearing your debts. The first is that if you wish to obtain credit of £500 or more, you must tell the lender that are subject to a DRO.

Secondly, if you carry out business in a name that is different to the name under which the DRO was granted, then you must tell everyone you do business with the name under which you were granted a DRO.

Thirdly, you cannot be a company director, nor can you be involved with the promotion, management or formation of a limited company, without the court’s permission.

Finally, you will not be able to apply for another DRO for 6 years.

It is permissable to open a new bank or building society account, but you will probably have to disclose that fact that you are the subject of a DRO, after which case they can decline or restrict your account.