Debt Relief Order vs Bankruptcy

A Debt Relief Order and bankruptcy both end with debts written off and a fresh start, but they are aimed at very different situations. A DRO is built for people with almost nothing to give creditors — low income, minimal assets, and debts within a set limit. Bankruptcy has no upper limit on what you owe, but a trustee can sell what you own. Both appear on a public register and stay on your credit file for years. This comparison sets out the differences that decide which one fits.

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Feature	Debt Relief Order	Bankruptcy
Maximum debt	Under £50,000	Unlimited
Cost	No fee (abolished April 2024)	£680
Duration	12 months	12 months
Asset limit	Assets must not exceed £2,000	Court decides what assets are realised
Income surplus allowed	No more than £75 per month surplus income	Varies — income payments agreement may apply
Public register
Credit record impact	Remains on credit file for 6 years	Remains on credit file for 6 years

A Debt Relief Order is only available through an approved intermediary — you cannot apply directly. Both options have serious long-term consequences. Always get free debt advice from Citizens Advice or StepChange before proceeding.

Which route is likely to fit

A Debt Relief Order is designed for people with little income beyond essentials, few or no assets, and debts within the scheme limit. Bankruptcy has no upper debt limit and no asset ceiling, but the trustee can sell what you own to pay creditors, including your share of a home. In practice the DRO is the gentler option where you qualify, and bankruptcy is the route when your debts or your assets take you outside those boundaries.

Renting, no car of significant value, very little spare income each month? A DRO is likely to be the right first question to ask an adviser.
Own a home with equity, or owe more than the DRO limit? Bankruptcy or an individual voluntary arrangement is the realistic territory.
Expecting circumstances to improve soon? Say so. A short-term breathing space or a repayment arrangement may serve you better than a formal insolvency that stays on your record for years.

You cannot apply for a DRO yourself — it must go through an approved intermediary at a debt advice charity, which is one reason to start with free advice rather than a commercial firm. Anyone charging you a fee to arrange debt help is selling you something you can get free from Citizens Advice, StepChange or National Debtline.

Both options restrict borrowing, appear on a public register, and can affect certain jobs and professional roles. Check your employment position and any professional body rules before applying, not afterwards.

Frequently asked questions

What happens to my home if I go bankrupt?

Your interest in the property passes to the trustee, who may sell it to release your share of the equity. Where there is little or no equity, the trustee often takes no action for a period, and the interest can revert to you if nothing is done within the statutory window. A partner or relative may be able to buy out your share. This is one of the most consequential parts of bankruptcy and the reason to take free specialist debt advice before applying rather than after.

Will my employer find out?

Insolvency appears on a public register that anyone can search, and some employers check it. A minority of roles are directly affected — company directorships, certain financial services positions, and some regulated professions have restrictions or reporting duties. Check your contract and any professional body rules before you apply. In most ordinary jobs an employer has no reason to look and no right to dismiss you for it, but it is better to know your position than to be surprised.

Which debts are not cleared?

Neither route wipes out everything. Student loans, court fines, child maintenance arrears, debts arising from fraud and certain family court orders normally survive. Secured debts such as a mortgage are not written off either — the lender keeps its rights over the property. Make sure your adviser has the full list of what you owe, including anything you are embarrassed about, because a debt left off the application may not be included in the discharge at the end.

How long before my credit record recovers?

The insolvency stays on your credit file for six years from the date it starts, and lenders will see it throughout. That does not mean six years without any credit — many people access basic bank accounts immediately and some borrowing well before the six years is up, usually at higher rates. Rebuilding starts with getting the basics right: a bank account that works, bills paid on time, and being registered to vote at your current address.

Related guides

Debt Relief Orders

A Debt Relief Order (DRO) is a formal insolvency solution for people with relatively low levels of debt, minimal assets, and very low surplus income. When a DRO is granted, you enter a 12-month moratorium during which creditors cannot take action against you and interest is frozen. At the end of the 12 months, your qualifying debts are written off completely. A DRO can be a powerful fresh start — but it comes with conditions and restrictions.

10 min

Breathing Space (Debt Respite Scheme)

Breathing Space, formally known as the Debt Respite Scheme, gives people in problem debt a legal pause from most creditor action for 60 days. During this period, interest and charges on qualifying debts are frozen, and creditors cannot chase you, take you to court, or send bailiffs. The scheme was introduced in May 2021 and is available in England and Wales.

8 min

Priority vs Non-Priority Debts

When you are struggling with multiple debts, the most important decision is which to pay first. Not all debts are equal — some carry far more serious consequences than others if left unpaid. Understanding the difference between priority and non-priority debts is the foundation of any debt management strategy and can protect you from losing your home, having your energy cut off, or facing imprisonment.

7 min

Disclaimer

The information on this page was correct at the time of writing. Amounts, thresholds, and rules may change. Always check the latest official guidance.