Living on a debt solution

Will I lose my car whilst on a debt solution? Part 3

Posted 14 November 2015

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So you think you need a debt solution, but you’re worried you’ll lose your car. Find out what happens here.

In parts one and two, we’ve covered what happens when you have a vehicle and you enter into bankruptcy or an IVA. In this final part, we’ll cover what happens when you want to take a DRO, debt management or debt consolidation.


If you are thinking about entering into a DRO to deal with debts and relieve the stress they can cause, pretty much the same rules apply as they do for bankruptcy. First off, you won’t be able to take a DRO if your vehicle is worth more than £1,000. So if it is, you need to think about a different debt solution. Why not have look at the other debt solutions available in the UK. And, if you think you’d like to chat through your situation and what options you may have, you can call or email us, use live chat. Just choose from the ‘contact us’ options on the left of the page or complete our personal report below.



If you think your car is worth less than £1,000, you’ll have to provide details of the make, model and registration so that your debt advisor can check the value. If the debt advisor finds that your car is worth more than £1,000, you will not be able to have a DRO.

If your vehicle is used just for business purposes, for example, if you’re a builder and you need your van to carry your tools around, it’ll still need to be worth under £1,000 if you want to enter into a DRO. If it’s worth more than that, there will be two options. You’ll either be advised to find an alternative debt solution, or you can sell the vehicle and but something cheaper. You will then have to distribute this money to your lenders, in equal portions, not favouring any one lender over another. It’s always worth remembering that debt solutions have both downsides as well as upsides. While they can relieve the pressure of a very stressful situation and help you get your finances back on track, they will also have a negative effect on your credit score for quite some time. This may make it more difficult or more expensive for you to get credit in the future. So, always make sure that you are fully aware of what you’re getting into before you make any decisions.    

Other debt solutions

There are some other debt solutions you may want to think about, these are debt management and debt consolidation. While it may still be a good idea to think about selling a high value, or non-essential car when you’re considering entering into these two solutions, it is not a requirement. So you could take these two solutions and you’d not be asked to consider selling your vehicle or downgrading. However, these two debt solutions are not legally binding on lenders and there’s no protection from being pursued by them either. So you may have more flexibility about what you do and don’t keep, but it’s possible that you could still accrue interest and charges, or even face court action.   

We hope this has made what happens to your car when you’re on a debt solution a little clearer. We do realise that most of the answers we give are quite vague and depend heavily on your circumstances. So, because of this, we’d always advise you speak to a trained debt advisor before making any decisions. They’ll be able to tell you the best solution for you, for free and without any obligation.

You can access free advice through us, using any of the ‘contact us’ options on the left of the age.





by Shelley Bowers

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.