IVA vs DMP vs DRO vs bankruptcy (UK comparison)

When people might explore each option

The points below are general only. They are not recommendations. Individual advice should always come from an FCA-regulated adviser or free debt charity that can look at your full situation.

IVAs

IVAs are sometimes explored by people who have a regular income, owe a significant amount of unsecured debt, and can afford a steady payment each month but not enough to clear everything in a reasonable time at the current rates. They are usually considered where people meet the eligibility criteria set by the provider and are willing to commit to a long-term, formal arrangement.

DMPs

Debt Management Plans are often used as an informal way of paying back unsecured debts over a longer period. Some people look at DMPs when they can afford something towards their debts but cannot manage the contractual minimum payments. Because DMPs are informal, creditors may agree to reduce or stop interest and charges, but they do not have to.

DROs

Debt Relief Orders are a formal option with strict eligibility rules. They are generally designed for people with relatively low levels of qualifying debt, limited spare income and few assets. For those who qualify and complete a DRO, many included debts may be written off after a set period, but there can be important consequences, particularly for future borrowing and certain roles.

Bankruptcy

Bankruptcy is a legal process that can sometimes write off debts more quickly, but it can also have serious long-term effects. It may be explored where other options are not suitable or have been ruled out, or where someone’s circumstances mean that maintaining payments into a long arrangement would be unrealistic. How bankruptcy affects assets, income and future opportunities depends on individual circumstances and the rules in place at the time.

This overview does not cover every detail or option. It is intended only as a starting point for understanding broad differences.