Debt Relief Orders and bankruptcy are both forms of personal insolvency. They have a lot in common, but the eligibility rules and costs are very different.
The short answer
- A DRO is for debts under £50,000; bankruptcy has no limit.
- A DRO is free; bankruptcy costs £680.
- DROs need assets under £2,000 and spare income under £75 a month.
- Homeowners usually can’t get a DRO.
- Both usually last 12 months and stay on your credit file for six years.
Side-by-side comparison
| DRO | Bankruptcy | |
|---|---|---|
| Debt limit | Under £50,000 | No limit |
| Cost | Free | £680 |
| Spare income | Usually under £75 a month | Any; you may pay an income payments agreement |
| Assets | Under £2,000, car under £4,000 | Assets may be sold |
| Homeowners | Usually not eligible | Home may be sold if there’s equity |
| How to apply | Through an approved intermediary | Online via GOV.UK |
| Length | Usually 12 months | Discharge usually after 12 months |
Which is right for me?
If you meet the DRO criteria, it’s usually the simpler and cheaper option. If your debts, income or assets are over the limits, bankruptcy or an IVA may need to be considered. See also IVA vs DRO and IVA vs bankruptcy.
Common questions
Is a DRO better than bankruptcy?
If you qualify, a DRO is usually simpler and free. It’s only available to people with lower debts, income and assets.
Can I go bankrupt after a DRO?
Yes, if your circumstances change. A DRO can also be revoked and replaced by bankruptcy in some cases.
Do DROs and bankruptcy have the same restrictions?
They’re similar, such as not borrowing more than £500 without disclosure, but bankruptcy has more significant effects on assets.
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.