A Debt Relief Order has strict limits on what you can own. Cars have their own limit, separate from the general £2,000 asset limit.
The short answer
- A vehicle worth less than £4,000 doesn’t stop you getting a DRO.
- The car’s value isn’t counted in the £2,000 general asset limit.
- Vehicles adapted for a disability are excluded from the limit.
- A car on finance belongs to the lender, but the payments affect your budget.
- Your intermediary will check the value, often using an online valuation.
How is my car valued?
Your approved intermediary will use a realistic market value, often from a recognised online valuation tool. Be honest about mileage and condition.
What if my car is worth more than £4,000?
You won’t usually qualify for a DRO. Other options include bankruptcy, where a modest car you need can often be kept, or an IVA. See bankruptcy and your car.
What about car finance?
If the car is on HP or PCP, it’s owned by the finance company. Your intermediary will look at whether the payments are reasonable within the £75 spare income limit.
Common questions
Can I sell my car to get a DRO?
Selling an asset for less than its value, or giving it away, shortly before a DRO can cause problems. Get advice first.
Is a Motability car counted in a DRO?
Motability cars are leased, not owned by you, so they aren’t counted as your asset.
Can I buy a car during a DRO?
You can’t borrow more than £500 without telling the lender about your DRO. Tell the Official Receiver if your assets change.
Getting help
You don’t have to deal with debt on your own. Free, impartial advice is available from MoneyHelper, StepChange and National Debtline. If you want to talk through whether a formal solution such as an IVA could be suitable, you can also get in touch with us.