What Happens During a Debt Relief Order?

What changes on the day your DRO is approved

The moratorium starts the moment the Official Receiver approves the application. From that day, the creditors listed in the order cannot ask you for payment, add interest or take enforcement action without the court's permission. Your adviser is usually told first and passes the news on.

The approval date is the date everything else runs from. The 12-month period, the six-year credit file entry and the six-year wait before any future DRO are all counted from it.

Nothing else changes overnight. Your rent and bills are still due, your wages are still paid, and there is no interview, no trustee and no sale of belongings.

The first few weeks

Most of the activity happens in the first month. After that, you mostly let the clock run.

1. Week 1

   Creditors are told

   The Insolvency Service notifies every creditor listed in the order. Your name is added to the Individual Insolvency Register, which is public. It stays there until three months after the order ends.

2. Weeks 2 to 6

   Your credit file and your bank catch up

   The credit reference agencies record the DRO, and the included accounts are normally marked as defaulted. If your current account is with a bank you owe money to, it may be frozen or closed. That is why advisers suggest opening a basic bank account elsewhere before applying.

3. Months 2 to 12

   Living with the order

   Statements may still arrive from included creditors. That is allowed and does not mean you owe the money again.

Paying bills and excluded debts during the order

A DRO only covers the qualifying debts that were listed when you applied. Your ongoing rent, council tax, gas, electricity, water, phone and insurance must still be paid from the approval date onwards. If you miss rent or council tax during the DRO, that is a fresh debt you will still owe after discharge.

Excluded debts carry on as well. Court fines, child maintenance, student loans, Social Fund loans and the other debts a DRO cannot include were never frozen, so payments and any enforcement for them continue.

Dealing with creditors and bailiffs who keep chasing

Some creditors keep sending demands after a DRO is approved. Usually their records have not caught up, or the debt has been sold to a collection agency that does not yet know about the order. You are still protected.

If a creditor writes or calls

Tell them, in writing if you can, that the debt is included in a Debt Relief Order. Give the approval date and reference number. Do not make a payment or agree a new arrangement.

If an enforcement agent visits

An enforcement agent (bailiff) needs the court's permission to act on an included debt. Do not let them in and do not pay. Show them the DRO paperwork and contact your adviser straight away. Check which debt is being chased, though: enforcement for an excluded debt such as a court fine is not stopped by the order.

Changes you must report to the Official Receiver

You have a legal duty to tell the Official Receiver about any change to your income, assets or household. The DRO was granted because you were under the limits on the day you applied, so anything that moves you towards them matters.

• A pay rise, more hours, a new job or a second job.
• A lump sum, such as an inheritance, compensation, a redundancy payment or a gift.
• A backdated benefit award or a tax refund.
• A new asset worth more than ordinary household items.
• A change in your household that alters your budget.

Not every change ends the DRO. A small rise that still leaves your spare income under £75 a month, or a windfall that keeps your assets under £2,000, may simply be noted. If in doubt, report it. Our guide on what happens if your circumstances change goes through the common situations.

Can a DRO be cancelled or extended?

Yes. The Official Receiver can revoke a DRO at any point during the period. The usual reasons are that your finances have improved so that you no longer qualify, that the application contained inaccurate information, or that you have broken the DRO restrictions. A creditor can also object and ask for the order to be revoked.

If the order is revoked, you owe the included debts again, usually with interest, and you would need fresh advice. A DRO is not revoked because you reported something honestly.

The period can also be extended, usually where the Official Receiver needs more time to look into a change or a possible breach. An extension delays discharge but does not cancel it.

Moving house, new partners and other life events

Ordinary life carries on during a DRO. Most events need only a little admin.

Moving house

Renting is unaffected, but you must give the Insolvency Service your new address so that letters reach you. Some letting agents run a credit check. Being open about the DRO, and offering references if you can, often helps.

Getting married or moving in with a partner

Your partner's income and assets are not part of your DRO, and your debts do not become theirs. A new household can alter your spare income, though, so tell the Official Receiver. Joint debts are only frozen for you.

A new baby, a change in benefits or a new job

Report any change to your income, including new benefit awards. Changing job or becoming self-employed is allowed. The DRO and employment guide covers pay rises, directorships and trading names.

Practical tips for getting through the year

A few habits make the year calmer.

• Keep every DRO letter in one folder. You will need the approval date and reference number more than once.
• Make a simple monthly budget and put aside something, even a few pounds, for emergencies, because there is no overdraft to fall back on.
• Check your credit file a few months in to make sure the included accounts show the right status.
• If the stress is affecting your health, the free advice services can point you to support. Your adviser is there all year.

At the end of the 12 months the included debts are discharged without you applying for anything. See what happens after a DRO ends for the detail.