Understanding your options is the first step towards dealing with debt. Below you will find detailed guides on each of the main debt solutions available. If you have any questions, please get in touch or check your eligibility.

A Debt Relief Order (DRO) is a formal debt solution designed for people with relatively low levels of debt, few assets and limited disposable income. It provides a fresh start by writing off qualifying debts after a 12-month period.

Who can apply for a DRO?

To qualify for a DRO, you must meet all of the following criteria:

• Your total qualifying debts must not exceed £50,000
• Your assets must not be worth more than £2,000 (excluding everyday household items)
• Your vehicle must not be worth more than £4,000
• Your disposable income must be £75 per month or less
• You must not be a homeowner
• You must not already be subject to another formal insolvency solution

How does a DRO work?

A DRO application must be made through an approved intermediary, who will assess your eligibility and submit the application to the Insolvency Service on your behalf. There is no application fee.

Once approved, the DRO lasts for 12 months. During this time:

• You do not need to make any payments towards your qualifying debts
• Your creditors cannot take action against you to recover debts included in the DRO
• Interest and charges on included debts are frozen

After the 12-month period, provided your circumstances have not significantly changed, your qualifying debts are written off completely.

Things to consider

• A DRO will be recorded on the Individual Insolvency Register for the duration of the order, plus 3 months
• It will remain on your credit file for 6 years, or 1 year after the DRO ends, whichever is the later
• There are restrictions during the DRO period, for example you must disclose the DRO if borrowing £500 or more
• Not all debts can be included in a DRO (for example, student loans and court fines are typically excluded)

Where is a DRO available?

A DRO is available in England, Wales and Northern Ireland.

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors to repay a proportion of your debts over an agreed period, typically 5 to 6 years. An IVA must be set up and supervised by a licensed Insolvency Practitioner.

How does an IVA work?

An IVA allows you to consolidate multiple debts into a single affordable monthly payment. Your Insolvency Practitioner will assess your income and essential living costs to determine what you can reasonably afford to pay each month.

For an IVA to be approved, at least 75% by value of the creditors who vote must accept the proposal. Once approved, the IVA is binding on all creditors, including those who voted against it.

During the IVA:

• You make one affordable monthly payment, which is distributed among your creditors
• Interest and charges on included debts are frozen
• Creditors are legally prevented from contacting you directly or taking further action
• Essential assets such as your home and vehicle are usually protected

Once you have successfully completed the terms of your IVA, your remaining unsecured debts are written off.

Things to consider

• A typical IVA lasts 5 to 6 years
• An IVA will remain on your credit file for 6 years from the date it was registered, or 1 year after completion, whichever is the later
• Your IVA will be listed on the Individual Insolvency Register
• You will need to stick to a managed budget for the duration of the arrangement
• Fees are payable to the Insolvency Practitioner, though these are usually built into your monthly payments
• If your circumstances change significantly, your IVA may need to be modified or could fail

Where is an IVA available?

An IVA is available in England and Wales. Scotland has an equivalent arrangement called a Protected Trust Deed.

Bankruptcy is a formal legal process that can provide relief when debts have become unmanageable and cannot be resolved through other means. It is typically considered as a last resort when other debt solutions are not suitable.

How does bankruptcy work?

You can apply for bankruptcy online through the Insolvency Service. The application fee is £680, which can be paid in instalments before your application is submitted.

Once a bankruptcy order is made:

• An Official Receiver or trustee takes control of your financial affairs
• Creditors must stop all collection activity against you
• Interest and charges on your debts are frozen
• Bankruptcy typically lasts for 12 months, after which you are discharged

After discharge, most of your qualifying debts are written off. However, you may be required to make payments from your income for up to 3 years if you have surplus disposable income (known as an Income Payments Agreement).

Things to consider

• If you own property or assets of significant value, these could be sold to repay creditors
• Bankruptcy will remain on your credit file for 6 years, or 1 year after discharge, whichever is the later
• Your details will be recorded on the public Insolvency Register
• There are restrictions during bankruptcy, for example you cannot act as a company director without court permission
• Bankruptcy may affect certain types of employment, so you should check your contract before applying
• Not all debts are included in bankruptcy (for example, student loans, court fines and child maintenance are typically excluded)

Where is bankruptcy available?

Bankruptcy is available in England and Wales. In Scotland, the equivalent process is called sequestration. In Northern Ireland, the process is also available.

A Debt Management Plan (DMP) is an informal arrangement between you and your creditors to repay your debts at a reduced monthly amount. Unlike an IVA or DRO, a DMP is not legally binding.

How does a DMP work?

A DMP is arranged on your behalf by a debt management company or a debt charity. They will negotiate with your creditors to agree lower monthly payments based on what you can afford.

Each month, you make a single payment to your DMP provider, who then distributes it among your creditors.

Benefits of a DMP

• One affordable monthly payment covering all included debts
• Most creditor contact will be handled by your DMP provider
• Creditors may agree to freeze interest and charges, though this is not guaranteed
• Free DMP services are available through debt charities

Things to consider

• A DMP is not legally binding, so creditors are not obliged to accept it or freeze interest
• Creditors can still take further action, such as applying for a County Court Judgment
• A DMP is likely to have a negative impact on your credit rating
• Because payments are reduced, a DMP may take longer to repay your debts in full
• Priority debts such as rent, council tax and utility bills are not usually included
• Some fee-charging DMP providers may apply set-up fees and monthly management charges

Useful Links

• IVA Protocol 2025 (GOV.UK)
• IVA Protocol 2021 (GOV.UK)
• Money Helper – Free impartial money advice
• GOV.UK – Options for paying off your debts

The information on this page is for general guidance only and does not constitute financial advice. Each person’s circumstances are different, and you should seek professional advice before making any decisions about your debts.