DROs and bankruptcy · 4 min read
DRO vs bankruptcy: which is better for you?
A Debt Relief Order is free and simpler, but only for people with debts of £50,000 or less, low income and few assets. Bankruptcy costs £680 and has no debt limit, but risks your assets. A side-by-side comparison.
- Fact-checked
- Against official sources
- Last updated
- Next review due
- April 2027
- Applies to
- England and Wales
- Sources
- 3 listed on this page
Independent guidance, not a government service. This page is general information about the law in England and Wales, not financial or legal advice. Debt solutions have fees, risks and consequences. For free, impartial advice, contact MoneyHelper or a debt charity.
The short answer
If you qualify, a Debt Relief Order is usually the simpler and cheaper choice: it’s free, lasts 12 months, and doesn’t involve a trustee selling your assets. But it’s only available if your debts are £50,000 or less, your spare income is £75 a month or less and your assets are £2,000 or less (plus a vehicle under £4,000). Bankruptcy costs £680, has no debt limit and suits people who don’t meet the DRO limits, but your assets can be sold.
Side-by-side comparison
| Debt Relief Order | Bankruptcy | |
|---|---|---|
| Cost | Free | £680 |
| Debt limit | £50,000 | None |
| Spare income limit | £75 a month | None, but you may pay income payments for up to 3 years |
| Assets | £2,000 limit, plus a vehicle under £4,000 | No limit, but assets can be sold |
| Homeowners | Usually not eligible | Your share of the home may be sold |
| How to apply | Through an approved intermediary | Online application to an adjudicator |
| Length | 12 months | Usually discharged after 12 months |
| Restrictions | Can’t borrow £500+ without disclosing; can’t be a company director without permission | Similar, plus some professions barred |
| Credit file | 6 years | 6 years |
| Public record | Individual Insolvency Register | Individual Insolvency Register and the Gazette |
| Stops bailiffs for included debts | Yes | Yes |
Why a DRO is usually better if you qualify
- No fee – the £90 fee was scrapped in April 2024.
- No trustee dealing with your possessions.
- No income payments – your spare income is already very low.
- Simpler process, done with a debt adviser.
That’s partly why DROs reached a record 46,939 in 2025, while bankruptcies fell to 7,460 (Insolvency Service).
When bankruptcy might be the right choice
- Your debts are over £50,000.
- You have assets over £2,000 or a vehicle worth £4,000 or more.
- Your spare income is over £75 a month, but you can’t repay your debts in a reasonable time.
- You’ve had a DRO in the last six years.
If you have a regular income and want to protect your home, an IVA may also be worth considering. Read IVA vs bankruptcy.
Can repay in full, just slowly
Payment arrangements or a debt management plan
Need time to get advice
Breathing Space (60 days' protection)
Low income, few assets, debts up to £50,000
Debt Relief Order (free)
Regular spare income, want to protect your home
Individual Voluntary Arrangement (fees apply)
Can't repay in a reasonable time, DRO not possible
Bankruptcy (£680 fee)
Not sure?
Free advice from MoneyHelper, or speak to an FCA-authorised adviser
Simplified illustration only. The right option depends on your full circumstances. Every formal solution affects your credit rating. Not advice.
Frequently asked questions
Is a DRO a type of bankruptcy?
No, but both are formal insolvency procedures. A DRO is designed for people with low income and few assets, and is simpler and free.
Can I get a DRO if I own a car?
Yes, if it’s worth less than £4,000.
Which affects my credit rating more?
Both stay on your credit file for six years. Bankruptcy is also published in the Gazette.
Sources
- GOV.UK, Debt Relief Orders
- GOV.UK, Applying to become bankrupt
- Insolvency Service, Individual insolvency statistics, December 2025
How we wrote this article
- Research: written from primary sources such as legislation.gov.uk, GOV.UK and the Insolvency Service, then fact-checked by a second member of our team. The sources are listed above.
- Checked: last checked on . Next review due April 2027, or sooner if the rules change.
- Scope: applies to England and Wales. If you live in Scotland or Northern Ireland, read our Scotland and Northern Ireland guide. It is general information, not personal advice.
- Independence: we are not a government website or service, and we are not connected to any council, court or enforcement company.
- Money: we may receive a fee if we introduce you to a debt advice firm. This doesn't change what we write. How we're paid.
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