Two people can owe exactly the same amount and be sent down different roads. One pays nothing to clear the debt. The other pays £680 first. The difference is rarely the debt itself.
Short answer. In England and Wales, a debt relief order (DRO) costs nothing and suits people with debts under £50,000, under £75 of spare income a month, under £2,000 of assets and no home of their own. Bankruptcy costs £680, has no debt limit, and is for people who do not fit those tests. Both usually last 12 months and stay on your credit file for around 6 years. Free advice: StepChange on 0800 138 1111.
This compares the two using GOV.UK on DROs, GOV.UK on bankruptcy, Citizens Advice and StepChange, checked October 2026. It covers England and Wales. Scotland and Northern Ireland work differently.
For scale, the Insolvency Service recorded 3,838 DROs and 671 bankruptcies in England and Wales in September 2026, so far more people use the DRO. Both sit alongside 7,385 IVAs that month. The full figures are on our debt statistics page.
The two side by side
| Debt relief order | Bankruptcy | |
|---|---|---|
| Cost | No fee | £680 (£130 + £550 deposit) |
| How you apply | Through an approved debt adviser. You cannot apply alone | Online, yourself, with an adjudicator deciding |
| Debt limit | Under £50,000 | None |
| Spare income | Under £75 a month | Any amount, but you may pay from spare income for up to 3 years |
| Assets | Under £2,000. A vehicle under £4,000 is not counted | Can be sold. Home equity above £1,000 is at risk |
| Own your home? | Generally not eligible | Allowed, but you may lose your share of the equity |
| How long | 12 months | Usually 12 months |
| Credit file | 6 years | Up to 6 years |
Read the table from the bottom up and the pattern is clear. The last two rows are almost identical. The first six decide everything.
Three questions that decide it
Do you own your home? GOV.UK describes DROs as for people who do not own their home. If you do, a DRO is generally off the table, and you are choosing between bankruptcy, an IVA or a debt management plan. Our guide on what you can keep if you go bankrupt explains what happens to the equity.
How much is left each month after the essentials? A DRO needs less than £75 spare. Your adviser works it out after a reasonable amount for household expenses, and counts money other people pay into the household. One wrinkle: GOV.UK says less than £75, while Citizens Advice says £75 or less. If you are right on the line, ask your adviser how they will count it.
How big is the debt, and what do you own? Debts of £50,000 or more rule out a DRO, even if you own nothing. And more than £2,000 in assets rules it out too. Savings, shares, valuable items, money you are owed and even a mobile phone of real value count towards that £2,000. Household furniture, clothing, tools for work and most pensions do not.
Three people, three outcomes
These are our own illustrations, not real cases.
| Person | Situation | Likely route |
|---|---|---|
| Sam | £22,000 across cards and a catalogue. Renting. £30 spare a month. £900 savings. A car worth £2,500 | A DRO. Every test is passed, so there is no fee |
| Priya | £22,000 of debt. Owns her flat with some equity. £140 spare a month | Bankruptcy or an IVA. A DRO is out because she owns her home and has more than £75 spare |
| Dev | £61,000 of debt, much of it from a failed business. Renting. Nothing spare, no assets | Bankruptcy. The debt is over £50,000, so a DRO is not available |
Notice that Sam and Priya owe the same amount. The debt did not choose their route. Sam’s thin finances and Priya’s home ownership did.
Priya would also want to compare the IVA route. We cover it in DRO vs IVA and IVA pros and cons, because an IVA can sometimes protect a home that bankruptcy would put at risk.
What is the same in both
Both come with rules while they run. In a DRO, GOV.UK says you cannot borrow more than £500 without telling the lender, act as a company director, or create, manage or promote a company without the court’s permission. You must also tell the people you do business with about the DRO if you manage a business, and tell a bank when you open an account. In bankruptcy, GOV.UK lists similar limits on borrowing over £500, being a director and running a business under a name you did not use before. You may be prosecuted if you break the rules in either.
Both leave some debts standing. A DRO does not cover things like student loans and court fines. Bankruptcy leaves debts from fraud, student loans and other debts not included, secured debts like a mortgage if you keep the home, and DWP crisis or budgeting loans. If student loans are your worry, see our post on student loans and DROs and IVAs.
Both end in 12 months, usually. A DRO can be cancelled if your finances change, and extended if you break the restrictions. Bankruptcy can run longer if the official receiver pursues a bankruptcy restrictions order, and income payments can last up to 3 years. Our guide to how bankruptcy works has the full timeline.
The record each one leaves
| Record | DRO | Bankruptcy |
|---|---|---|
| Individual Insolvency Register | Removed 3 months after the DRO ends | Updated within 3 months of discharge |
| Credit file | 6 years | Up to 6 years from the date of bankruptcy |
| Land Charges register | Not applicable | Usually removed after 5 years |
Neither is quiet. Both will show on credit checks and affect mortgages, loans and some jobs for years. But both end, and people rebuild. Our guide on what a default does to your credit file shows how lenders read the record.
If you fit neither
Plenty of people fall between the two. Too much debt or income for a DRO, too much to lose in bankruptcy. That is where an IVA or a debt management plan comes in. An IVA is a formal deal with your creditors, usually over several years, that can protect more of what you own. A debt management plan is informal and flexible but does not give you the same legal protection. We compare the two in debt management plans and IVA pros and cons, and the free Bankruptcy and DRO Checker shows quickly where you stand.
The step most people skip
Before choosing, see an adviser who is free. Only an approved adviser can apply for a DRO for you, so the conversation has to happen anyway. They check whether you pass every test, and whether another route such as a debt management plan would suit you better. If you are not eligible for a DRO, the same adviser can explain bankruptcy and the £680 fee. Our guide on how much bankruptcy costs and how to get help paying covers that.
Need time first? Breathing space gives you a pause from most enforcement while you arrange advice. Then start from the UK debt help hub for every option.
Questions people ask at 2am
Is a DRO better than bankruptcy?
If you qualify, a DRO is usually cheaper because there is no fee, while bankruptcy costs £680. You qualify with debts under £50,000, under £75 spare income a month, under £2,000 of assets, no vehicle worth £4,000 or more, and no home of your own. Which is better depends on whether you pass those tests.
Can I get a DRO if I own my home?
GOV.UK describes DROs as for people who do not own their home, so generally no. If you own a home, ask an adviser about bankruptcy, an IVA or a debt management plan.
What if I earn slightly more than £75 spare?
Then a DRO is probably not available. GOV.UK says under £75, Citizens Advice says £75 or less, and your adviser works out the figure after reasonable household expenses. A small difference in how costs are counted can matter, so ask them to show their working.
Do bankruptcy and a DRO both last 12 months?
Usually, yes. A DRO runs for 12 months, and bankruptcy usually lasts 12 months until discharge. A DRO can be extended if you do not follow its restrictions, and bankruptcy can bring longer restrictions or income payments of up to 3 years.
Will either wipe out my student loan?
No. Student loans are not covered by a DRO, and bankruptcy leaves debts such as student loans standing too. Court fines are also left in a DRO.
Which one looks worse to employers and lenders?
Both appear on your credit file for around 6 years and on the Individual Insolvency Register, so neither is quiet. Some professions and company roles have their own rules, so check the ones that apply to your job before you decide.
Can I do either one myself?
You can apply for bankruptcy yourself, online, once the full £680 is paid. You cannot apply for a DRO alone. It has to go through an approved debt adviser, and that is free.
More UK help: how to pay off debt.
Disclaimer: DebtShift is an educational platform operated by H Ali Logistics Ltd, which is not authorised or regulated by the Financial Conduct Authority (FCA). This article is general education, not financial or legal advice. For free, impartial debt advice, contact StepChange on 0800 138 1111.
Sources
- GOV.UK, Debt Relief Orders
- GOV.UK, Apply for bankruptcy
- GOV.UK, Becoming bankrupt
- Citizens Advice, How income, debts and belongings are assessed for a DRO
- StepChange, Insolvency costs and court fees
Last reviewed October 2026
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