The four solutions at a glance
Each UK formal debt solution has different eligibility rules, durations, costs and consequences. The right choice depends on your debt level, asset position, income and housing situation. This is the high-level comparison; detailed sections follow.
| Solution | Best for | Duration | Cost |
|---|---|---|---|
| DMP (Debt Management Plan) | Manageable debts, want flexibility | Until debts cleared | Free via charities |
| IVA (Individual Voluntary Arrangement) | £15k+ debts, regular income, own home | 5-6 years | Fees from contributions |
| DRO (Debt Relief Order) | Under £50k debts, low income, no home | 12 months | Free (since April 2024) |
| Bankruptcy | Unmanageable debts, no DRO route | 12 months (typical discharge) | £680 |
| All four | Stay on credit file | 6 years from start | Free advice from charities |
Get free advice before deciding
Each solution suits a specific profile. Picking the wrong one can be worse than not acting. StepChange, National Debtline and Citizens Advice all provide free assessment of which solution fits. Beware commercial debt management companies charging fees, the same advice and solutions are available free from charities.
Debt Management Plan (DMP)
A DMP is the least formal of the four. You make reduced monthly payments to your unsecured creditors via a single payment to a debt management provider. The provider distributes the money pro-rata. Creditors usually freeze interest and charges for the duration.
DMPs are not legally binding, creditors can change their minds. In practice, most major UK creditors honour DMPs administered by reputable charities. Free DMPs available via StepChange and PayPlan.
Manageable debts and a desire for flexibility
DMPs work best when you have unsecured debts you can realistically clear within ~5 years at a reduced rate. They are flexible: you can change the amount, add or remove creditors, or exit at any time. They preserve more of your dignity and less of your credit file impact than formal insolvency. The trade-off: you pay your debts in full eventually, but creditors can technically still take court action even on a DMP.
Individual Voluntary Arrangement (IVA)
An IVA is a formal legally binding agreement between you and your unsecured creditors, supervised by an Insolvency Practitioner. You pay a set amount each month for typically 5-6 years; at the end any remaining unsecured debt is written off. Creditors representing 75% of your debt by value must approve the proposal at a meeting.
Per Insolvency Act 1986 Part VIII. Once approved, the IVA binds all creditors whether they voted yes or not. IPs are paid from your monthly contributions, fees are regulated.
£15,000+ debts with regular income and assets to protect
IVAs particularly suit homeowners. Property usually stays out of the IVA (though equity may need to be released near the end via remortgage). The trade-off: 5-6 years of strict budget supervision, with any "windfall" income (bonus, inheritance, lottery) potentially captured. IVA fees can total £4,000-£8,000 over the term, paid from contributions, but the debt write-off usually exceeds the fees significantly. Beware commercial IVA introducers, IPs work for both you and creditors.
Debt Relief Order (DRO)
A DRO is a formal debt write-off route designed for people with low income, few assets and limited debts. Following the major 2024 reforms, DROs are free to apply for and the qualifying debt threshold rose to £50,000. After 12 months of moratorium, all qualifying debts are written off.
Apply only via approved intermediaries: StepChange, Citizens Advice, National Debtline and PayPlan. Cannot apply direct to the Insolvency Service.
The 2024 changes opened DROs to many more people
Before 2024: maximum £30,000 debt, £1,000 assets, £75 disposable income, £2,000 car and a £90 fee. After 2024: maximum £50,000 debt, £2,000 assets, £75 disposable income, £4,000 car and FREE. The Insolvency Service estimated thousands more people would qualify per year. If a DRO was previously refused or deemed inappropriate, it is worth checking eligibility again under the new rules. Contact a free debt advisor for an updated assessment.
If you cannot pay your debts and you do not own a home and your debts are under £50k, a DRO is almost always cheaper and less damaging than bankruptcy. The 12-month moratorium freezes interest and enforcement; at the end debts are written off provided your circumstances have not improved.
Bankruptcy
Bankruptcy is the most formal route. Your assets vest in a Trustee in Bankruptcy or the Official Receiver, who can sell them to repay creditors. Most UK bankruptcies are automatically discharged after 12 months. After discharge, remaining unsecured debts are written off.
Apply at gov.uk/apply-for-bankruptcy. Fee remission available for those on means-tested benefits or with very low income. Once made bankrupt, the order is irrevocable except in narrow appeal grounds.
Check DRO eligibility first under the 2024 rules
Many people who were ineligible for a DRO under pre-2024 rules now qualify. DRO is cheaper (£0 vs £680), faster (12 months vs ongoing) and less damaging to home/assets than bankruptcy. Always check DRO eligibility before applying for bankruptcy. Bankruptcy is the right answer when: you own a home with positive equity worth keeping (rare), debts exceed £50k, you have surplus income above £75/month, or you specifically need the asset-sale process to deal with complex business debts.
How to choose between them
Use this decision framework to identify the most suitable solution. Free debt advisers will run through these questions properly, but the high-level logic:
Homeownership rules out DRO. IVAs typically protect the home (you may need to release equity in year 5). Bankruptcy puts the home at significant risk: the Trustee can apply for an order for sale within 3 years of the bankruptcy order. If you own a home, IVA is usually the better route assuming you have regular income.
The 2024 DRO reforms made this the default route for low-income debtors without property. Free, fast (12 months), substantial debt write-off. Eligibility: assets under £2,000 (plus car up to £4,000), disposable income under £75/month, no other formal insolvency. Apply via approved intermediary at a free debt charity.
If you have £75/month surplus or more after essentials, you do not qualify for a DRO. IVA gives a clear 5-6 year exit with debts written off; DMP keeps you paying in full but flexibly. Choice depends on whether you can realistically clear the debts in 5 years (DMP) or you need the formal write-off (IVA).
DRO is excluded by debt size. Bankruptcy is fastest (12 months), IVA is more controlled (5 years, no asset risk) but takes longer. For non-homeowners with debts over £50k and limited assets, bankruptcy is often simpler. For those with regular income wanting structure, IVA can work.
If you can realistically clear all unsecured debts at a reduced rate within ~5 years, a DMP avoids the formal insolvency stigma and credit file impact of the other options. Worth doing if you can. If not, you fall back to one of the formal solutions.
Get individual advice before choosing
This decision framework is a starting point, not a final answer. Each person's situation has variables that affect which solution suits: joint debts, business debts, vulnerable circumstances, future income changes and more. The free debt charities will work through this with you in detail (typically a 60-90 minute first conversation) and give a proper recommendation. Same advice as a paid IVA company gives but free.
Scotland: MAP and Protected Trust Deed
Scotland has separate insolvency law and separate solutions. The Scottish equivalents are: Minimum Asset Process (MAP, the DRO equivalent), Protected Trust Deed (PTD, the IVA equivalent), Sequestration (Scottish bankruptcy) and Debt Arrangement Scheme (DAS, more flexible than English DMP). Run by the Accountant in Bankruptcy.
Free advice from Money Advice Scotland and Citizens Advice Scotland. The DAS in particular can be more powerful than English DMPs because it formally binds creditors and protects from enforcement.
The DAS is often a strong option
Scotland's Debt Arrangement Scheme provides formal protection: once approved by the AiB, creditors are bound, interest and charges are frozen and enforcement is paused. Available even with significant disposable income, unlike DRO/MAP. Free to apply via a Scottish money adviser. Often a good middle-ground between DMP and formal insolvency for Scottish residents.
Getting the right advice
The free UK debt charities are FCA-regulated, comprehensive and completely free. Avoid commercial debt management companies that charge fees (legal but rarely better than free options). The four main free providers:
UK's largest free debt charity. Online tool and phone advice. Provides DMPs, IVAs, DRO applications. 0800 138 1111 or stepchange.org
Phone-led advice service from the Money Advice Trust. Strong specialism in court action, complex debt and enforcement. 0808 808 4000 or nationaldebtline.org
Local face-to-face advice across England and Wales. Approved DRO intermediary. Useful when you have multiple intersecting issues (debt + housing + benefits). 0800 144 8848 or citizensadvice.org.uk
Government-backed advice service. Online debt advice tool and links to specialist services. 0800 138 7777 or moneyhelper.org.uk
Commercial debt management and IVA factories
The UK has many commercial firms charging fees for debt management or pushing IVAs to people who would be better off with DROs. Common warning signs: large upfront fees, "guaranteed write-off" claims, pushing IVA when DRO would suit better, refusal to disclose all-in fees. Rule of thumb: if a "debt advisor" calls or texts you out of the blue, it is a sales call, not free advice. Free charities never cold-call. See FCA warnings about debt advice scams.
The four UK debt solutions cover almost every situation
Between DMP, IVA, DRO and bankruptcy, almost every UK debt problem has a formal exit route. The 2024 DRO reforms have made the cheapest and fastest option available to many more people. Pick based on: home ownership, debt level, surplus income and how much certainty you need. Get free advice from one of the four charities above before applying. Same advice as commercial firms, no fees, regulated by the FCA. Most UK debt situations are solvable; the right formal solution turns "unmanageable" into "structured" and "ending". See companion guides on priority debts, negotiating with creditors and debt going to court.