DRO vs Bankruptcy: how they compare
Debt Relief Order against Bankruptcy on duration, cost, your home, your credit file and what gets written off. An honest comparison, with the risks of both.
Quick answer: DRO vs bankruptcy
| DRO | Bankruptcy | |
|---|---|---|
| Cost to apply | Free (England & Wales, since April 2024) | £680 |
| Debt limit | Debts must not exceed £50,000 | No limit |
| Home | Homeowners not eligible | A home with equity is at risk |
| Assets | Max £2,000 (vehicle to £4,000 separate) | Vest in the trustee, with exemptions |
| Spare income | £75/month or less | Income payments possible for 3 years |
| Length | 12 months, then write-off | Discharge usually after 12 months |
| Applied through | Approved intermediary (free advice sector) | Online to the adjudicator |
| Credit file | Six years | Six years |
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The comparison in full
| Debt Relief Order | Bankruptcy | |
|---|---|---|
| Legally binding on creditors | Full protection, then write-off | Full protection, then discharge |
| Duration | 12 months | Discharged in 12 months; payments up to 3 years |
| What you pay | No payments at all | Only if you have surplus income |
| Cost to you | Free — no application fee | £680 application fee |
| Your home | Not available to homeowners | May be sold |
| Credit file | 6 years from the order date | 6 years from the order |
| Public record | Yes — Listed on the public Individual Insolvency Register. | Yes — Listed on the public Individual Insolvency Register, and in some cases advertised more widely. |
| Debt written off | Yes, at the end of the term | Yes, at the end of the term |
| Where it applies | England and Wales (Northern Ireland has its own version with different thresholds) | England, Wales and Northern Ireland (Scotland calls it sequestration) |
Factors an authorised adviser weighs when assessing Debt Relief Order
People on a low income with few assets and no realistic prospect of repaying. You must apply through an approved intermediary — usually a free debt advice charity. You cannot apply directly.
Factors an authorised adviser weighs when assessing Bankruptcy
People with no realistic prospect of repaying, who are outside DRO limits — often because of the level of debt, income or assets.
The verdict
Work through the DRO thresholds first, since it is free and less intrusive. If your debts exceed £50,000, your spare income exceeds £75 a month, your assets exceed £2,000, or you own a home, bankruptcy becomes the route to consider instead. A free adviser will establish which side of the line you are on in a single appointment.
Risks on both sides
- The thresholds are strict and absolute. Go over any one of them and you are ineligible.
- If your circumstances improve during the 12 months, the order can be revoked and the debts come back.
- It is a public record.
- You cannot get another DRO for 6 years.
- Assets including your home and a vehicle above a modest value can be sold.
- Certain professions restrict or prohibit undischarged bankrupts — company directors, some financial services and legal roles, and some regulated occupations.
- It is public, and can be reported.
- You may be subject to a Bankruptcy Restrictions Undertaking of 2 to 15 years if conduct is criticised.
- The £680 fee has to be found first.
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