IVA vs DRO vs Bankruptcy vs DMP
Every UK debt solution compared side by side. Understand the costs, eligibility, and consequences — then get free advice from a qualified debt advisor.
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| Factor | Debt Relief Order | Individual Voluntary Arrangement | Bankruptcy | Debt Management Plan |
|---|---|---|---|---|
| Cost to start | £90 | Fees from payments | £680 | Free (via charity) |
| Duration | 12 months | 5–6 years | 12 months | Until debts paid |
| Max debt covered | £30,000 | No maximum | No maximum | No maximum |
| Monthly payment | £0 | £100+ | Varies | What you can afford |
| Credit impact | 6 years | 6 years | 6 years | Duration of plan |
| Keep your home? | N/A (no property) | Usually yes | May be sold | Yes |
| Best for | Low income, low assets, debts under £30k | Regular income, debts over £6k to 2+ creditors | Large debts, no realistic way to repay | Some disposable income, want to repay in full |
Debt Relief Order (DRO)
Low income, low assets, debts under £30k
✓ Advantages
- Debts written off after 12 months
- No monthly payments required
- Very low cost (£90, payable in instalments)
- Creditors cannot contact you
✗ Disadvantages
- Must have under £75/month disposable income
- Assets must be under £2,000
- Cannot include student loans or court fines
- Appears on credit file for 6 years
How to apply (free)
Apply through Citizens Advice, StepChange, or National Debtline — all free
Individual Voluntary Arrangement (IVA)
Regular income, debts over £6k to 2+ creditors
✓ Advantages
- One affordable monthly payment
- Remaining debt written off at end
- Legal protection from creditors
- Usually keep your home
✗ Disadvantages
- Lasts 5–6 years — long commitment
- Credit rating severely affected
- Insolvency Practitioner fees taken from payments
- Windfall clause — lump sums may go to creditors
How to apply (free)
Get free advice first from StepChange (0800 138 1111) — they don't charge upfront fees
Bankruptcy
Large debts, no realistic way to repay
✓ Advantages
- Debts written off after 12 months
- Clean break from overwhelming debt
- Can keep essential household items
- Creditors cannot chase you
✗ Disadvantages
- Your home may need to be sold
- Costs £680 to apply
- Your name appears on the Insolvency Register
- Some professions are restricted
How to apply (free)
Get free advice from StepChange or Citizens Advice before applying
Debt Management Plan (DMP)
Some disposable income, want to repay in full
✓ Advantages
- Flexible monthly payments
- No formal insolvency
- Free through charities like StepChange
- Can include most non-priority debts
✗ Disadvantages
- Not legally binding — creditors may not agree
- Interest may continue (though often frozen)
- Can take many years to clear debts
- Creditors can still contact you
How to apply (free)
Set up for free through StepChange (0800 138 1111) — never pay a fee for a DMP
Breathing Space (Debt Respite Scheme)
Not a debt solution, but a 60-day legal pause on all enforcement while you get advice. During Breathing Space, creditors must stop all contact, charges, and enforcement action.
60 days
Duration
Free
Cost
Almost all debts
Applies to
Via debt advisor
How to get it
Read our full guide: Breathing Space explained
⚠️ Warning: Never pay for debt advice
All debt advice in the UK is available completely free. Companies that charge upfront fees for IVAs, DMPs, or debt management are taking money you could use to repay debt.
Frequently Asked Questions
What is the cheapest way to clear my debts?
A Debt Relief Order (DRO) costs just £90 and can write off debts up to £30,000 after 12 months. If you don't qualify, a free Debt Management Plan through StepChange costs nothing to set up.
Will an IVA affect my credit score?
Yes. An IVA will appear on your credit file for 6 years from the date it starts. During this time, it will be difficult to get credit. However, once completed, your remaining debts are written off.
Can I lose my home if I go bankrupt?
Potentially, yes. If you own a property with equity, a trustee may require it to be sold to repay debts. However, if you rent or your property has no equity, this won't apply. Always get free advice before deciding.
What's the difference between an IVA and a DMP?
An IVA is a formal, legally binding agreement that writes off remaining debt after 5-6 years. A DMP is an informal arrangement where you repay debts in full but at a reduced monthly amount. IVAs offer more protection but last longer.
How do I know which debt solution is right for me?
The right solution depends on your total debt, income, assets, and personal circumstances. Take our free Survival Check for a personalised assessment, or call StepChange on 0800 138 1111 for free expert advice.
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