A Debt Relief Order is for people who owe less than £50,000, have under £75 a month spare, hold assets worth less than £2,000 and do not own property. It is free and an approved debt adviser applies for you. Bankruptcy has no debt limit, costs £680 and a trustee can sell anything of value, including your home.

The choice often makes itself. If you qualify for a DRO it is almost always the cheaper and simpler route. If not, bankruptcy is the formal alternative. Only an approved debt adviser can confirm whether you meet the DRO tests.

The differences at a glance

Both routes write off included debts after 12 months, but they differ on cost, eligibility and what you can keep.

DRO and bankruptcy compared. DRO figures reflect GOV.UK guidance updated 28 June 2024.
Feature Debt Relief Order Bankruptcy
Eligibility Strict tests on debt, income, assets and property Anyone who cannot pay their debts as they fall due
Debt limit Qualifying debts under £50,000 None
Fee £0 (the £90 fee ended on 6 April 2024) £680
Who applies An approved intermediary, to the Insolvency Service You, online, to the Adjudicator
Length 12 months Usually 12 months; income payments can last up to 3 years
Your home Must not own or have any interest in property Passes to the trustee, who can sell it if there is equity
Vehicle One vehicle under £4,000 disregarded; adapted vehicles at any value Kept if needed for work or daily life; a valuable one can be sold
Pension Approved pensions you cannot yet draw are generally not counted Approved schemes generally protected; pension income can count towards payments
Restrictions Borrowing, directorships and trading; extendable 2 to 15 years Very similar; extendable 2 to 15 years
Publicity Insolvency Register until 3 months after the DRO ends Insolvency Register until 3 months after discharge, plus The Gazette
Credit file 6 years from approval 6 years from the bankruptcy order

How much each costs and how you apply

A DRO costs nothing. The £90 fee was abolished on 6 April 2024 and advice from an approved intermediary is free. You cannot apply yourself. An approved debt adviser sends the application to the Insolvency Service, where the Official Receiver decides without a court hearing.

Bankruptcy costs £680, paid before you submit the application online, and an Adjudicator decides. Finding £680 is a real barrier for many people. Our guide to Debt Relief Order costs covers what a DRO can still cost you indirectly.

Who qualifies for each route?

A DRO has firm tests and every one must be met on the day you apply. Debts, spare income and assets must sit under the limits above. You must also have lived or worked in England or Wales within the last 3 years and not had a DRO in the last 6 years. The full list is on the DRO eligibility page.

Bankruptcy has no equivalent tests. Anyone who cannot pay their debts as they fall due can apply. The income and asset limits guide explains how advisers measure each DRO figure.

What happens to your home and belongings

This is the sharpest difference. You cannot get a DRO if you own or have any interest in property, including a joint share or a home abroad, even in negative equity. So a DRO never puts a home at risk.

In bankruptcy your interest in your home passes to the trustee, who can sell it if there is equity worth realising. Savings, shares and valuable items can also be sold. A car is usually kept if you need it, but an expensive one may be replaced with a cheaper one. See DRO and homeownership and DRO and vehicles.

Restrictions, publicity and your credit file

The restrictions are almost identical. In either route you must not borrow £500 or more without telling the lender, act as a company director without court permission, or trade under another name without telling customers. Breaking these rules is a criminal offence, and dishonest or reckless behaviour can lead to a restrictions order lasting 2 to 15 years. See Debt Relief Order restrictions.

How public each one is

Both appear on the public Individual Insolvency Register until 3 months after they end. Bankruptcy is also advertised in The Gazette, which a DRO never is.

How long it stays on your credit file

Credit reference agencies record a DRO for 6 years from approval and a bankruptcy for 6 years from the order. Either route makes new credit harder to get, as our credit score guide explains.

When a DRO is the better choice

If you pass every DRO test, there is rarely a reason to choose bankruptcy. The outcome is the same, but a DRO is free, needs no trustee and involves no Gazette notice. It suits you if your situation is unlikely to improve within the year.

When bankruptcy may be better

Bankruptcy is the formal route when a DRO is out of reach, usually because one limit is exceeded. Debts of £50,000 or more rule out a DRO, though excluded debts such as student loans do not count, so check which debts qualify first. Owning property or having £75 a month or more spare rules it out too. In bankruptcy, surplus income can be collected for up to 3 years.

Bankruptcy is not a punishment, but it is a bigger step. The fee must be found up front and the process is more public.

Where a DRO is lighter

  • No application fee.
  • No trustee, no court and no Gazette notice.
  • No income payments after the 12 months.
  • An adviser prepares the application with you.

Where bankruptcy is the only formal route

  • Debts of £50,000 or more.
  • Homeowners and people with a share in property.
  • Spare income of £75 a month or more.
  • Assets worth £2,000 or more.

Can you move from one to the other?

Yes. The usual path is a refused or revoked DRO followed by bankruptcy.

If a DRO is refused

The Official Receiver can refuse a DRO if you fail a test, gave inaccurate information, or made preferential payments or undervalue transactions in the last 2 years. If the problem cannot be fixed, bankruptcy may be the fallback, though the £680 fee then has to be found. See what to do if a DRO is refused.

If a DRO is revoked

A DRO can be revoked during the 12 months if your circumstances improve beyond the limits, for example through an inheritance. The debts come back and an adviser may then suggest bankruptcy. See what happens if your circumstances change.

From bankruptcy to a DRO

You cannot apply for a DRO while you are an undischarged bankrupt. A past bankruptcy does not bar a later DRO, but every other test still applies.

Want a quick indication of whether the DRO route is open to you?

Use the eligibility checker

Before you rely on this page

Debt Relief Order is an independent educational website. We are not the Insolvency Service and we do not provide regulated debt advice. Bankruptcy has consequences that go beyond this summary. Always confirm your position with an approved debt adviser before choosing either route.

Sources and further reading