A Debt Relief Order (DRO) is a debt solution that allows people with minimal income and assets to freeze payments towards certain debts for a period of 12 months. After this time, if their financial situation hasn’t improved, any debts included in the DRO are written off and the DRO ends.

Life after a DRO can involve some challenges especially when it comes to rebuilding credit. This article goes through exactly what happens when a Debt Relief Order ends, offering tips and advice on financial recovery. 

What Happens When a DRO Ends?

Once your Debt Relief Order is completed, you’re legally free from the debts included in the DRO. You also won’t need to follow any of the rules and restrictions you did during the DRO, unless you have a Debt Relief Restrictions Order (DRRO) or Debt Relief Restrictions Undertaking (DRRU) against you. 

However, it’s important to note that you won’t receive any official notification or confirmation of your DRO ending. It’s therefore a good idea to note down when it started. Alternatively, you can check your entry in the Individual Insolvency Register (IIR), which will state when your DRO ends.

After your DRO ends, you will stay on the IIR for three months until your name is removed. Your DRO will stay on your credit file, however, for six years from the date it started, meaning it may be difficult to get credit in the five years following your DRO. 

Rebuilding Your Credit Score After a DRO

There are both pros and cons to having a DRO. One of the disadvantages is the negative impact on your credit score. It’s therefore important to take steps to rebuild it after your DRO ends and there are a few ways you can do this, such as:

• Making sure you’re on the electoral roll

When you register to vote, your electoral details such as your name and address are recorded on your credit report. This makes it easier for creditors to verify your identity, improving your credit score.

• Checking your credit report

It’s a good idea to get a copy of your credit report and review it for any errors. Your DRO should be recorded as ‘discharged’ and all accounts included in your DRO should be marked as ‘satisfied’ or ‘partially settled’. If there are mistakes, contact the credit agencies to have them corrected.

• Making sure to pay any bills on time

Paying things like credit card or mobile phone bills in full and on time can improve your credit score, proving to potential lenders that you are a reliable borrower.

• Starting small with credit building

If you can, apply for a credit card designed for those with poor credit or a secured credit card. These types of cards can help improve your credit score if you make payments on time. Just make sure to only use the card for small purchases so you can pay it off in full every month.

Can You Apply for Credit After a DRO?

Yes, but it may be difficult. Potential creditors will be able to see your DRO on your credit file, which suggests you haven’t been able to keep up payments in the past. Because of this, lenders may view you as a higher-risk borrower. 

As a result, you may experience credit application rejections and if you are offered credit, you will likely encounter high interest rates and low credit limits. Therefore, for larger credit applications, such as a mortgage or personal loan, you may need to wait until the DRO is removed from your credit score.

It’s also important to be aware that too many applications for credit can negatively impact your credit score. With this in mind, you should wait a while between credit applications. As time passes and you take steps to improve your credit score, it should become easier to get credit. 

Practical Tips for Financial Recovery

In addition to rebuilding your credit score, it’s important to maintain stable financial management. Here are some practical steps to take:

• Create a budget

To create a budget, start by calculating your monthly income. Then, track your spending and identify areas to save. Use this information to set a realistic budget that covers expenses and savings.

• Build an emergency fund

Try to put aside a bit of money each month so you can build an emergency fund. Having savings to cover unexpected expenses will prevent you from needing to rely on credit in the future.

• Use credit wisely

It’s important to manage credit carefully to avoid falling back into debt. Ideally, you should use no more than 30% of the credit available to you.

• Seek professional advice

If you’re unsure how to manage your finances after a DRO, consider speaking to a debt expert here at MoneyPlus. Alternatively, you can get free debt advice from MoneyHelper. 

Frequently Asked Questions About Life After a DRO

How can I prove my DRO has ended?

Your DRO is recorded on the Individual Insolvency Register (IIR) so for proof that it has ended, print off a copy of your entry on the IIR. This will show the end date of your DRO period. However, make sure to print this off before you’re removed from the IIR, which is three months after your DRO ends.

How long after a Debt Relief Order can I get credit?

While it’s possible to get credit as soon as your DRO ends, it’s very difficult as your DRO will stay on your credit file for six years from the start date. During this time, creditors will likely see you as a high-risk borrower so may be more likely to reject your application. It’s therefore a good idea to wait until you’ve improved your credit score before applying for credit.

How often can I apply for a DRO?

You have to wait at least six years from your initial application before applying for a DRO again. This is the case even if your DRO was cancelled after being approved. 

What happens if a creditor doesn’t accept my DRO has ended?

If a creditor tries to collect a debt included in your DRO after it has ended, you can challenge this and ask your DRO adviser for support. There may be a couple of exceptions, for example if you have rent arrears or a controlled goods agreement with a bailiff. 

Can I get a mortgage after a DRO? 

Getting a mortgage immediately after a DRO is challenging, but it’s possible with time and effort. Many lenders will consider your application once the DRO has been removed from your credit report, but you may need to demonstrate a solid financial track record in the years following the DRO.