Bankruptcy, IVA, DRO — Formal Debt Solutions in UK 2026
Updated 27 May 2026
DRO threshold raised from £30k to £50k (28 June 2024) and application fee ABOLISHED (was £90, removed 6 April 2024). The most accessible insolvency route for low-income migrants. Bankruptcy is £680, 12-month discharge. IVA is 5-6 years. All three trigger the "good character" check in citizenship applications (Home Office guidance v7.0).
Before any formal insolvency, get free advice (StepChange, Citizens Advice, National Debtline). All three instruments affect "good character" for naturalisation — timing procedures relative to planned immigration applications is critical.
01 DRO (Debt Relief Order) — expanded since 28 June 2024
- Debt: ≤ £50,000 (was £30k)
- Surplus income: ≤ £75/month after essentials
- Assets: ≤ £2,000 (vehicle up to £4,000 exempt separately)
- Application: FREE (was £90, abolished 6 April 2024)
- Moratorium: 12 months — creditors cannot chase the debt
- After 12 months: debts listed in DRO are written off
- Credit file: 6 years from DRO date
- Repeat: only after 6 years
Apply through an approved intermediary (Citizens Advice, StepChange).
02 Bankruptcy — £680, 12-month discharge
- Debtor application fee: £680
- Discharge: after 12 months (automatic with cooperation)
- Credit file: 6 years
- Restrictions: directorships, some regulated professions (FCA, legal)
03 IVA (Individual Voluntary Arrangement) — 5-6 years
- Agreement with creditors: pay part of debt, rest is written off
- Duration: typically 5-6 years
- Requires 75%+ creditor vote by value
- Set up through a licensed insolvency practitioner (paid service)
04 Immigration impact by status
Refugees and ILR
Status is not revocable for bankruptcy alone (only fraud or serious crime). BUT for citizenship: Home Office "good character" guidance v7.0 — recent bankruptcy (~4-10 years before application) often leads to refusal. Time DRO/bankruptcy carefully — complete well before naturalisation application.
Skilled Worker / Family / H&C
Bankruptcy does not automatically curtail your visa. But at renewal or settlement, Home Office may apply public interest factors in serious cases. NHS debt £500+ is a separate hard ground for refusal.
Student
Not directly linked to visa. Unpaid tuition fees → sponsor withdraws licence → curtailment.
05 Free advice BEFORE insolvency
- StepChange: stepchange.org — free plan + DRO intermediary
- Citizens Advice: DRO intermediary + face-to-face
- National Debtline: 0808 808 4000 (free)
- MoneyHelper: moneyhelper.org.uk — government-backed service
General information only, not legal or financial advice. For debt and insolvency questions — StepChange (free) or Citizens Advice. Immigration impact — consult an IAA-regulated adviser.