Debt solutions · 4 min read
Can I keep my car in an IVA, DRO or bankruptcy?
Whether you can keep your car depends on the debt solution, the car's value and whether it's on finance. The rules for DROs (£4,000 limit), IVAs and bankruptcy, plus what happens to cars on hire purchase or PCP.
- 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
- DRO: you can keep a vehicle worth less than £4,000.
- IVA: you can usually keep a car you need, if its value is reasonable. A high-value car may need to be sold or its value paid into the IVA.
- Bankruptcy: you can usually keep a car you reasonably need; a valuable one may be sold and replaced with a cheaper one.
- Cars on hire purchase or PCP belong to the finance company, so they’re treated differently in every solution.
Car rules by debt solution
| Debt Relief Order | IVA | Bankruptcy | |
|---|---|---|---|
| Car you own outright | Allowed if worth less than £4,000 | Usually kept if needed and of reasonable value | Kept if reasonably needed; valuable cars may be sold and replaced |
| Car on hire purchase/PCP | Not your asset; keep paying if you want to keep it | Usually excluded; keep paying if affordable and reasonable | Usually not part of the bankruptcy estate; keep paying if you want to keep it |
| Motability car | Leased, so not an asset | Not an asset | Not an asset |
| Logbook loan car | Secured against the car | Lender can still repossess | Lender can still repossess |
Debt Relief Orders
To qualify for a DRO, any vehicle you own must be worth less than £4,000. A car worth £4,000 or more usually means you won’t qualify, unless it’s specially adapted for a disability. Read our DRO guide.
IVAs
Your IVA proposal will set out what happens to your car. If you need it for work, school runs or caring responsibilities and it’s of reasonable value, you’ll usually keep it. If it’s expensive, creditors may expect you to sell it and buy a cheaper one, or pay some of its value into the IVA. Car finance payments may be allowed as an essential cost if the car and payments are reasonable. Read is an IVA a good idea?
Bankruptcy
The trustee can sell assets, but you can usually keep a car you need, as long as its value is reasonable. If it’s worth more, it may be sold and a cheaper replacement provided. Read how to go bankrupt.
Cars on finance
If your car is on hire purchase or PCP, the finance company owns it until the final payment. In most debt solutions you can choose to keep paying if it’s affordable and reasonable. If you can’t, you may be able to hand it back under voluntary termination once you’ve paid half of the total amount. Read can’t pay car finance?
And bailiffs?
Bailiffs can’t take cars on finance, Motability cars or vehicles displaying a valid Blue Badge, and work vehicles are protected up to the £1,350 tools of the trade limit. Read can bailiffs take my car?
Frequently asked questions
Can I get a DRO if my car is worth £5,000?
Usually not, because the vehicle limit is £4,000. An adviser can check whether any exception applies or whether another option suits you.
Will I lose my car in an IVA?
Not usually, if it’s needed and of reasonable value.
Can I buy a car during an IVA?
You’d need your supervisor’s agreement, and any finance would need to be disclosed.
Sources
- GOV.UK, Debt Relief Orders
- GOV.UK, Bankruptcy: your car and other possessions
- GOV.UK, Individual Voluntary Arrangements
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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