How long does a debt relief order take to process?

A Debt Relief Order (DRO) is an effective solution for those who have debts of less than £30,000 and are unable to make repayments – but do not have any sizeable assets. It’s an alternative to full bankruptcy, if you do not own your home.

Once a Debt Relief Order is made, it will take 12 months to process this and you are entered into a period of time called the moratorium. This sounds serious but it simply means certain restrictions are now placed upon you, while the Debt Relief Order is being processed.

They are very similar to the restrictions applied when someone goes bankrupt. During the moratorium period, you cannot:

• apply for credit of £500 or more without letting the lender know that you have taken on a Debt Relief Order
• continue running a business using a different name to the one your Debt Relief Order is under
• act as the director of a company without permission from the court
• be involved with setting up, managing or promoting a limited company without permission from the court
• add any new debts or debts that you’ve forgotten about once the Debt Relief Order is made.

It’s worth noting that in the unlikely event you go against your restrictions, you could be committing an offence and the Official Receiver dealing with your case can request that the restriction period be increased to 15 years.

If you receive notice that restrictions are being increased against you, these can be appealed if you have evidence you have done nothing wrong.

You will be expected to continue making certain repayments, while your Debt Relief Order is processed. These include your everyday household expenses, such as your rent, council tax, utility bills and water charges.

If you have any debts that aren’t included in your Debt Relief Order (known as excluded debts, such as CSA arrears, student loans etc.) then you will also need to continue repaying these to ensure you don’t fall behind and get into further financial trouble.

A Debt Relief Order also won’t stop bailiffs from taking control of your possessions, via a controlled goods agreement. So to get your possessions back you may have to pay some of the debt to have them returned or to keep them.

If you are renting and you owe your landlord money in rent arrears, a Debt Relief Order doesn’t stop them from taking further possession action against you. This means you may have to continue paying your rent arrears to stay in your home – though the amount of rent arrears must be included in the Debt Relief Order.

Once your Debt Relief Order is processed and complete you won’t have to pay off the debts that were included, and you will be free to make a fresh start.

Once you have applied for a Debt Relief Order and it has been approved, a number of things will happen to begin the process. You will receive written confirmation from the Official Receiver that your Debt Relief Order has been approved.

Here is a quick breakdown of what happens next:

• First you will be sent a notice the Order has been made and you will be made aware of what you need to do now. All restrictions and requirements will also be outlined at this stage.
• Your creditors will be sent notice that you have entered into a Debt Relief Order.
• You will be added to the Insolvency Register

If your circumstances change you must first notify the Official Receiver, dealing with your Debt Relief Order.

What is classed as a change in circumstances?

• If you receive a large windfall – such as inheritance money or even a bonus at work.
• If you receive or sell any large assets, left to you in a will.
• If you realise something is wrong on your application or there is missing information.
• Your income increases, you change employment or move address.

These things can make a big difference to your Debt Relief Order, which is why it’s important you notify people immediately. If you fail to tell your official receiver of any changes, you are committing an offence and could see restrictions placed upon you for longer, a fine or even imprisonment in more serious cases.