Guide · 5 minute read · Updated 10 Jul 2026

DMP, IVA, bankruptcy or DRO: which UK debt solution is right?

There is no single best answer, only the right fit for your debts, your income and what you own. The real work is matching your situation to one of four routes, and doing it with free advice rather than a company that charges for what charities do for nothing.

Get free advice before you pick anything

Every solution below is offered free by StepChange, National Debtline and Citizens Advice. Paid firms sell the exact same DMPs and IVAs and take a cut of your payments, so start with the charities. They will run the numbers, check what you actually qualify for, and they have no product to push. Before that call, list every debt, every essential outgoing and your take-home pay; the budget planner gets you most of the way there.

A Debt Management Plan: informal and flexible

A DMP is an informal arrangement, usually run by a charity or a paid firm, where you make one monthly payment that gets shared out among your creditors. It suits non-priority debts (credit cards, overdrafts, personal loans) when your problem is temporary or you can pay something, just not the full amount.

Because it is informal it is also flexible: you can change the payment if your circumstances change, and you can walk away. The flip side is that it binds nobody. Creditors do not have to freeze interest, though many will, and the debt is not written off, so a large balance can take many years to clear. Use the debt payoff planner to see how long your balances would actually take at a given monthly figure.

An IVA: formal and binding

An Individual Voluntary Arrangement is a formal, legally binding deal set up by a licensed insolvency practitioner. You pay a set amount for typically five to six years, after which any remaining qualifying debt is written off. Once 75% of creditors by debt value agree, it binds all of them, so interest is frozen and they cannot chase you or add charges.

That binding power is the appeal, and the cost is the trade-off. The practitioner's fees come out of your payments, an IVA stays on your credit file for six years, it is recorded on a public register, and if you own a home you may be asked to release equity near the end. Break the terms and it can fail, which can tip you towards bankruptcy.

A Debt Relief Order: for low debt and few assets

A DRO is built for people with little spare income and almost nothing to lose. In England and Wales you can apply if your qualifying debts are £50,000 or less, your assets are worth £2,000 or less (plus one vehicle worth up to £4,000), and you have £75 or less spare each month after essentials. You cannot usually get one if you own your home.

It is free to apply (the £90 fee was abolished in April 2024), lasts twelve months, and at the end the debts are written off. You make no payments during it. It stays on your credit file for six years. A DRO is applied for through an authorised debt adviser, not directly, which is another reason to go through a charity.

Bankruptcy: the reset of last resort

Bankruptcy clears almost all your debts but takes your assets to do it. You apply online for £680 (a £550 deposit plus a £130 adjudicator fee), payable in instalments before you submit. You are usually discharged after twelve months, though payments from surplus income can run for three years, and any home equity can be sold to pay creditors.

It is the right call when the debts are simply too big to repay and there is no equity worth protecting, but the loss of assets and the six-year credit-file mark mean it is genuinely a last resort, not a shortcut. An adviser will tell you honestly whether a DRO or an IVA would leave you better off first.

Common questions

What is the difference between a DMP and an IVA?

A DMP is informal: you pay what you can afford, creditors are asked (not forced) to freeze interest, and you can leave any time. An IVA is a formal, legally binding deal lasting five to six years that writes off remaining debt at the end, but it locks in the terms, carries practitioner fees, and shows on a public register.

Who can get a Debt Relief Order in 2026?

In England and Wales you need qualifying debts of £50,000 or less, assets worth £2,000 or less (plus a vehicle up to £4,000), and £75 or less spare income a month. You usually cannot own a home. It is free to apply (the £90 fee was scrapped in April 2024), lasts twelve months, then the debts are cleared.

How much does it cost to go bankrupt in the UK?

It costs £680 to apply for your own bankruptcy in England and Wales: a £550 deposit for the official receiver plus a £130 adjudicator fee. You can pay it in instalments online before you submit, and you may qualify for a fee waiver on the adjudicator part if you are on certain benefits.

Should I pay a company to set up a debt solution?

No. StepChange, National Debtline and Citizens Advice set up DMPs and refer you for DROs, IVAs and bankruptcy entirely free. Paid firms offer the same solutions and take fees from your payments, which means less reaches your creditors and the debt clears more slowly.

Guidance and education, not regulated financial advice.