Wondering what happens after your Debt Relief Order ends? A Debt Relief Order usually last for 12 months and at the end of that time, it simply ends. This article explains what happens after your Debt Relief Order (DRO) discharge.
How do I know when my DRO has ended?
A DRO usually lasts for 12 months and at the end of that time it simply ends, 12 months after it starts it finishes. Unfortunately, the insolvency service does not send out any documentation when your DRO has come to the end of its moratorium period. Therefore the best way to ascertain whether your DRO has come to an end is to recall the date that you went through the DRO and on the same date the following year assume that your DRO has ended unless you hear otherwise from the Official Receiver.
You can also check the Individual Insolvency Register, contact the Approved Intermediary who submitted the application to the Insolvency Service or you could contact the Insolvency Service DRO Unit.
Please note, it is possible for DROs to be revoked, or have restrictions placed.
My DRO has ended, why am I still being chased by creditors?
You are not liable for this debt as the original debt was included in your DRO. It may be beneficial for you to contact the Official Receiver dealing with your DRO regarding this or simply forward a copy of your DRO to the new debt collections agency showing that you are no longer liable for this debt.
Please note, if the debt was not included in the DRO application then it has not been written off and you are still liable for it. This debt may become statute-barred after 6 years (for more information read our article on how to deal with debt).
Can I apply for a mortgage, after my DRO ends?
After the moratorium period of the DRO is over there is nothing to stop you applying for a mortgage but you may find it harder to get one. As a general rule of thumb, a DRO stays on your credit file (and so affects your credit rating) for up to 6 years. It is removed from your credit rating within 3 months of the order ending. Please also bear in mind that, should your assets increase beyond the £300 threshold for a DRO during the moratorium period then the DRO could be revoked.
In addition to the above, the decision to lend will always be assessed by the mortgage lender at the time you apply. It may be that some lenders have products, or rates, that are only available to customers who have an unblemished credit history. It could be that some mortgage lenders will not agree when someone has been through a DRO in the past couple of years. Lenders also look at affordability, Loan to Value, employment and many other details when making decisions.
There are many mortgage providers and each may have several mortgage products that you could apply for. If you speak to a qualified mortgage adviser they may be able to identify mortgage products that are suited to your circumstances. A good starting point may be the Money Advice Service Homes and Mortgages pages.
Please note, some mortgage applications may ask the question to whether a person has ever been subject to any insolvency proceedings. In which case you have to answer truthfully and state yes.
Can I claim a tax refund after my DRO ends?
It is possible for a DRO to be revoked after it has finished if it becomes clear that the criteria were not met and you may need to contact the approved intermediary who put your case together originally to see how and if this would make a difference to your DRO.
If someone claims a tax refund during a DRO then the way the refund is treated depends on the tax years that the refund was for and the amount. It can be treated as a cash asset or as additional income depending on how that relates to the timing of the DRO in relation to the tax year. For the tax year relevant to your DRO, the amount of refund is generally divided by 12 months and counted as income. If the refund was for a tax year prior to the DRO then it could be treated as a cash asset.
This could mean that the criteria for the DRO are not met as someone could then have a lump sum of over £300 or more than £50 a month left over as disposable income.
My DRO has ended, can I keep my inheritance?
It would not really be whether the inheritance would be taken or not, it would be to see if the DRO should have been revoked because you owned an asset worth over £300. If that is the case then a DRO is usually revoked and all of the debts still exist and still need paying.
In the case the DRO has ended without being revoked, with no restrictions, all debts discharged and the inheritance did not become funds owned by you during the DRO then it is unlikely that it will have any impact to your previous DRO. If you are in any doubt then it is always wise to consult directly with the DRO Unit as they will be able to advise, specific to your case, of any impact, or will be able to put your mind at ease.
How can I improve my credit ratings after completing my DRO?
The DRO will show on your credit history for the 6 years following the moratorium period (usually 12 months). The best thing to do is to handle your finances well during these 6 years and show how you can budget and be responsible with your finances. For more information on improving your credit ratings, please read our article: How to improve your credit ratings.
Can I apply for credit after my DRO is clear?
Your DRO will still show on your credit record for 6 years and it is up to individual credit providers as to whether they will provide credit to you during this time. You must also declare to potential creditors your previous insolvent status when applying for credit of £500 or more. This means individual and cumulative borrowing of £500. The best way to improve your credit rating is to live within your means and not take out any credit during this time.