In England and Wales the main solutions for debts you cannot repay are a Debt Relief Order, bankruptcy, an Individual Voluntary Arrangement and a debt management plan. A DRO is free, lasts 12 months and is for people with debts under £50,000, little spare income and no property.

Which option fits depends on your spare income, what you own and how much you owe. Only an approved debt adviser can confirm whether you qualify for a DRO.

All the options side by side

The table summarises each option. Every row hides exceptions, so treat it as a starting point rather than a verdict.

Main debt solutions in England and Wales compared. DRO figures reflect GOV.UK guidance updated 28 June 2024; other figures are general and may change.
Solution Who it suits Debt limit Cost Length Your home Other assets Credit file Formal or informal Who runs it
Debt Relief Order Low income, few assets, no property Under £50,000 Free 12 months, then written off Must not own any property Under £2,000; one vehicle under £4,000 disregarded 6 years Formal insolvency Official Receiver, via an approved intermediary
Bankruptcy Debts or assets too large for a DRO None £680 Usually 12 months; income payments up to 3 years Can be sold Assets of value can be sold 6 years Formal insolvency Adjudicator; Official Receiver or trustee
Individual Voluntary Arrangement (IVA) Reliable surplus income None in law Practitioner fees from your payments Typically 5–6 years Usually kept; equity may be released Usually kept 6 years Formal, binding once approved Insolvency practitioner; 75% of creditors must approve
Debt Management Plan (DMP) Some surplus; debts repayable in reasonable time None Free from charities; fees from firms Until repaid No restriction No restriction Defaults may be recorded Informal; creditors not bound Debt charity or fee-charging firm
Administration order Small debts with a county court judgment Under £5,000 Court fee from each payment Until paid or as the court directs No specific restriction No specific restriction 6 years Formal, court-based County court
Breathing Space Anyone getting advice who needs creditors paused None Free 60 days; mental health version lasts treatment plus 30 days No effect No effect No entry Statutory protection, not a solution Debt adviser; held by the Insolvency Service

What each solution is

Each option either writes debt off, repays part of it, or repays all of it more slowly.

Debt Relief Order

A DRO is a formal insolvency solution for people with debts under £50,000, less than £75 a month spare, assets under £2,000 and no property. It is free, an approved intermediary applies for you, and after 12 months the included debts are written off. Start with what a Debt Relief Order is.

Bankruptcy

Bankruptcy has no debt limit and no income or asset tests. You apply online yourself for £680. A trustee can sell assets of value, including your home, and you are usually discharged after 12 months.

Individual Voluntary Arrangement

An IVA is a repayment plan supervised by a licensed insolvency practitioner, usually for five to six years. Creditors holding 75% of the voting debt must approve it, and the balance is written off at the end.

Debt management plan

A DMP is an informal agreement to repay your debts in full through reduced payments. Creditors are not bound, interest is not guaranteed frozen and nothing is written off.

Administration order

An administration order is made by the county court for debts under £5,000 where you have at least one county court judgment. You make one monthly payment to the court, which distributes it.

Breathing Space

The Debt Respite Scheme gives 60 days of protection from creditor action while you get advice. The mental health crisis version lasts for the treatment plus 30 days. It pauses the problem rather than solving it.

Start here

What is a Debt Relief Order?

How a DRO works and who it is for.

Cost
Free
Length
12 months
Debts
Under £50,000
Read the DRO guide
Formal insolvency

DRO vs bankruptcy

Two routes to a fresh start with very different costs and limits.

Fee
£0 vs £680
Debt limit
£50,000 vs none
Home
Must not own vs may be sold
Compare DRO and bankruptcy
Formal arrangement

DRO vs IVA

A write-off after 12 months against a repayment plan lasting five or six years.

Cost
Free vs fees
Length
1 year vs 5–6 years
Home
Must not own vs usually kept
Compare DRO and IVA
Informal arrangement

DRO vs Debt Management Plan

A binding write-off against an informal plan creditors can decline.

Written off
Yes vs no
Binding
Yes vs no
Length
1 year vs until repaid
Compare DRO and DMP

How to choose between them

Advisers start with four facts about your situation, and the answer usually follows from those.

Your spare income

Work out what is left each month after rent, council tax, food, energy, travel and other reasonable costs. Less than £75 points towards a DRO or bankruptcy. More than that makes an IVA or DMP possible. Our guide to the income and asset limits explains how advisers calculate this figure.

Your home and assets

Owning any property, or a share in one, rules out a DRO even in negative equity. Bankruptcy puts the home at risk, while an IVA or DMP usually lets a homeowner stay put. Savings, investments and a vehicle worth £4,000 or more count against a DRO once they pass £2,000 in total. See DRO and homeownership.

How much you owe

Qualifying debts must be under £50,000 for a DRO. Above that, bankruptcy or an IVA are the formal routes. The qualifying debts page explains which debts count towards the limit.

Your need for certainty

If you need a guarantee that collection stops and the debt ends on a known date, a formal solution gives that. A DMP gives flexibility instead.

Formal versus informal solutions

Formal solutions bind your creditors by law. Informal ones depend on their agreement.

Formal (DRO, bankruptcy, IVA)

  • Legally binding on the creditors included.
  • Enforcement action on included debts must stop.
  • Debts are written off at the end.
  • On the Insolvency Register and your credit file for six years.

Informal (DMP, self-negotiated offers)

  • No legal restrictions and no Insolvency Register entry.
  • Can be started, changed or stopped at any time.
  • Creditors can refuse, add interest or take court action.
  • Nothing is written off; you repay in full.

A formal solution suits someone who needs the law on their side. An informal one suits someone whose difficulty is temporary and who expects to repay. Our DRO advantages and disadvantages page looks at where the formal route costs you flexibility.

Scotland and Northern Ireland

The DRO described on this site exists only in England and Wales, and you must have lived or worked there within the last three years. Scotland has the Minimal Asset Process (MAP), a form of bankruptcy for people with low income and few assets. Northern Ireland runs its own DRO scheme.

If you live in either nation, the comparisons here will not apply directly. The free debt advice guide explains how to find an adviser who covers your nation.

Getting advice before you choose

Every option here has consequences that last years. A DRO can only be applied for through an approved intermediary, who must consider all of your options first. Bankruptcy is a decision you make yourself, but never without advice.

Free, confidential advice is available from Citizens Advice, StepChange and National Debtline, and MoneyHelper's locator can point you to a service near you. For a quick sense of where you stand, the DRO eligibility checker stores nothing.

Not sure whether a DRO is even on the table?

Use the eligibility checker

Before you rely on this page

Debt Relief Order is an independent educational website. We are not the Insolvency Service and we do not provide regulated debt advice. Figures for other solutions are general and may have changed. Always confirm your position with an approved debt adviser before choosing a solution.

Sources and further reading