Debt solutions compared: DRO vs IVA vs bankruptcy vs debt management plan

Personal insolvency in numbers

More people are using formal debt solutions than at any time since 2010. In 2025, 126,240 people entered personal insolvency in England and Wales – one in every 395 adults (Insolvency Service). That was made up of:

Many more people use informal options such as debt management plans and payment arrangements, which aren’t counted in these figures.

The main options at a glance

Payment arrangements

Best for: one or two debts, where you can afford reasonable payments.

You contact each creditor (or the bailiffs) and agree an affordable amount. It’s free and flexible, but not legally binding, and interest may continue. For council tax, the council can agree a new instalment plan and recall the debt from bailiffs. See how to stop bailiffs.

Debt management plans (DMPs)

Best for: people who can afford to repay their non-priority debts in full, just more slowly.

A DMP is an informal agreement, arranged by a debt management company or charity, to pay your unsecured debts with one monthly payment. Creditors often freeze interest, but they don’t have to. A DMP isn’t legally binding and usually doesn’t include priority debts like council tax, so it may not stop bailiffs. Charities such as StepChange set up DMPs for free.

Breathing Space

Best for: anyone who needs immediate protection while they work out a long-term solution.

Breathing Space gives you 60 days’ legal protection from most creditor action, including bailiffs, and freezes most interest and charges. It’s free and must be applied for by a debt adviser. It isn’t a long-term solution on its own. Read our Breathing Space guide.

Debt Relief Orders (DROs)

Best for: people with low income (£75 a month or less spare), few assets (£2,000 or less, plus a vehicle under £4,000) and debts of £50,000 or less.

A DRO is free, lasts 12 months and writes off the debts included at the end. Homeowners usually can’t get one. Read our DRO guide.

Individual Voluntary Arrangements (IVAs)

Best for: people with a regular income who can afford monthly payments, owe a significant amount to several creditors and want to protect their home or other assets.

An IVA is legally binding and usually lasts five or six years, with the remaining included debt written off at the end. It has fees and real risks. Read our IVA guide.

Bankruptcy

Best for: people who can’t repay their debts within a reasonable time and don’t qualify for a DRO, or for whom an IVA isn’t suitable.

You apply online, and the application fee is £680. You’re usually discharged after 12 months, but if you have spare income you may have to make payments for up to three years. Valuable assets, including your share of a home, may be sold. Bankruptcy can also affect some jobs and businesses.

Other options

• Administration orders: for people with a county court judgment and total debts of £5,000 or less, where the court collects one payment and shares it out.
• Charging orders and attachment of earnings are enforcement methods creditors can use, not solutions – but knowing about them helps you understand the risks of doing nothing.
• Help from your council: Council Tax Reduction, discounts, exemptions and hardship funds can reduce what you owe going forward.

Which solution stops bailiffs fastest?

1. Agreeing an affordable payment with the bailiffs or creditor can stop a visit the same day.
2. Breathing Space can usually be registered quickly once you’ve spoken to a debt adviser.
3. A DRO stops action once it’s made, usually a few weeks after the application.
4. An IVA stops action once it’s approved by creditors, usually a few weeks after the proposal.

If bailiffs are already involved, an adviser may combine these – for example, using Breathing Space to protect you while a DRO or IVA is set up.

Free advice first

You don’t have to pay anyone for debt advice. You can get free, impartial advice from MoneyHelper and debt charities, or use our service to speak to an FCA-authorised debt adviser. Whoever you speak to should explain all the options that could suit you – not just one.

Go deeper

• Debt management plans explained
• IVA vs debt management plan
• DRO vs bankruptcy
• How to go bankrupt: process, cost and consequences
• Can debt be written off in the UK? The legitimate ways
• Is debt help really free? How debt firms are paid
• Can I keep my car in an IVA, DRO or bankruptcy?

Frequently asked questions

Which is better, a DRO or an IVA?

It depends on your circumstances. A DRO is free and quicker, but only available if your spare income, assets and debts are below the limits. An IVA suits people with a regular income who can afford monthly payments. If you qualify for both, an adviser should explain why one is better for you.

Do all debt solutions affect my credit rating?

Formal solutions (DROs, IVAs and bankruptcy) stay on your credit file for six years. Informal solutions don’t appear as such, but missed payments and defaults will.

Which debt solutions protect my home?

Payment arrangements, DMPs and Breathing Space don’t affect your home. An IVA usually protects it, although you may be asked to release equity. Bankruptcy can lead to your home being sold. DROs aren’t usually available to homeowners.

Sources

• Insolvency Service, Individual insolvency statistics, December 2025
• GOV.UK, Options for paying off your debts
• GOV.UK, Debt Relief Orders
• GOV.UK, Individual Voluntary Arrangements
• GOV.UK, Applying to become bankrupt