Debt & Money Problems
Debt Management Plans, DROs, IVAs & Bankruptcy
If you cannot pay your debts, there are several formal and informal solutions, each suited to different circumstances. Here is how the main options in England and Wales compare — and why free advice comes first.
Key information
- There is no single best solution — the right one depends on what you owe, own and earn
- A debt relief order (DRO) is free and can write off debts up to £50,000 for people with few assets
- An IVA and bankruptcy are formal insolvency routes with lasting effects
- A free debt adviser can recommend the right option — never pay before getting free advice
On this page
Informal arrangements and debt management plans
The simplest options are informal. You can agree reduced payments directly with creditors, or set up a debt management plan (DMP) — an informal arrangement, usually for non-priority debts, where you make one monthly payment that a provider shares out among your creditors. Charities such as StepChange run DMPs for free. A DMP is flexible and not legally binding, but interest is not guaranteed to be frozen, and it is not suitable for priority debts.
Debt relief orders (DROs)
A debt relief order is a formal solution for people who owe relatively little, have few assets and little spare income. It freezes your debts for a year and then writes them off if your situation has not improved. Since April 2024 there is no fee to apply. To qualify in England and Wales you must generally have debts of no more than £50,000, assets worth under £2,000 (a vehicle worth up to £4,000 is disregarded), and less than £75 a month of spare income. You apply through an approved debt adviser, not directly.
Individual voluntary arrangements (IVAs)
An individual voluntary arrangement is a formal, legally binding agreement to pay what you can afford over a set period — often five to six years — after which remaining eligible debts are written off. It is set up and run by a licensed insolvency practitioner, who takes fees from your payments. An IVA can protect assets such as your home in a way bankruptcy may not, but it is a serious, binding commitment and appears on the public Individual Insolvency Register.
Bankruptcy
Bankruptcy is a formal insolvency process that can write off most debts when there is no realistic prospect of paying them. You apply online and pay a fee (currently £680). You are usually discharged after 12 months, but assets — potentially including your home — can be sold to pay creditors, and there are restrictions while you are bankrupt. It is a significant step with lasting consequences, so consider it with a free adviser.
Get free advice before choosing
Because each solution affects your money, your assets and your credit file differently, choosing the wrong one can make things worse. A free debt adviser will look at your whole situation and recommend the most suitable option, impartially and without charge. Never pay a company to set up a solution before you have had free advice — the charities can do the same work for free. Scotland has its own separate solutions, such as the Debt Arrangement Scheme and sequestration.
Your rights & protection
- You are entitled to free, impartial debt advice, and a debt relief order is free to apply for.
- An IVA and bankruptcy are formal legal processes with defined protections and restrictions set out in law.
- You never need to pay a commercial firm to access a debt solution — free charities provide the same solutions.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- GOV.UK, Options for dealing with your debts (opens in a new tab). Accessed 22 Aug 2026.
- GOV.UK, How to get a Debt Relief Order (DRO) (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Debt solutions in the UK (opens in a new tab). Accessed 22 Aug 2026.