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Struggling with debt? How to choose between a DMP, IVA, DRO or bankruptcy

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UKUpdated 6 October 2026 · Written by BuyMeWhiskey Editorial Team · How we check facts

Deal with priority debts first, then pick a solution by what you can pay: a DMP or IVA if you have spare income, or a free DRO (under £50,000 owed, under £75 a month spare) or £680 bankruptcy if you can't repay. Get free advice before signing anything.

Use the free MoneyHelper debt advice locator to find a regulated, no-fee adviser. They can compare options with you and apply for Breathing Space if you need it.

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Start with priority debts

Before you choose a debt solution, sort your debts into two groups. Priority debts are the ones that can cost you your home, your energy supply or your liberty: rent and mortgage arrears, secured loans, council tax, gas and electricity, court fines, TV licence, overpaid tax credits and some hire purchase (for example a car you need). Citizens Advice says to deal with these first. Non-priority debts include credit cards, overdrafts, store cards and unsecured loans, including payday loans. They still need dealing with, but the consequences of falling behind are usually less severe.

Next, work out your spare income: what's left each month after essential bills and priority payments. That figure, along with how much you owe and whether you own your home, decides which options are open to you.

The main options in England and Wales

Informal arrangement. You ask each creditor to accept a lower payment. It costs nothing, but creditors don't have to agree.
Debt Management Plan (DMP). One monthly payment that's shared out between your unsecured creditors. It's useful if you can only pay a small amount, or if your situation should improve in a few months. You repay the debt in full. Creditors don't have to agree to it, and unless your agreement says otherwise they can still ask for the full amount later or take action. Citizens Advice says you don't need to pay for a DMP, because free providers exist, and any provider you use must be FCA-authorised.
Individual Voluntary Arrangement (IVA). A legal agreement run by an insolvency practitioner. You pay what you can afford, usually over 5 years, and the rest is written off at the end. It starts if creditors holding 75% of your debt agree, and then it binds all of them. There are set-up and handling fees, and an IVA goes on the public Individual Insolvency Register until 3 months after it ends.
Debt Relief Order (DRO). For people with little to pay. You must owe less than £50,000, have less than £75 a month spare income and less than £2,000 in assets, not own your home, not own a vehicle worth £4,000 or more, and not have applied for a DRO in the last 6 years. It's free, you apply through an approved debt adviser, payments stop for 12 months and then the debts are written off.
Bankruptcy. For debts you can't realistically repay. You apply online and the fee is £680. You're usually discharged after 12 months, although you may have to pay from spare income for up to 3 years under an income payments agreement. Your home may be affected if you have equity.
Administration order. For people with a county court or High Court judgment, total debts under £5,000 and at least 2 creditors.

DROs, IVAs and bankruptcy usually stay on your credit file for 6 years. Some debts can't be written off, including student loans and court fines.

Breathing Space while you decide

If you live in England or Wales, a debt adviser can apply for Breathing Space for you. It gives up to 60 days of protection during which creditors can't take enforcement action, contact you about the included debts or add interest and charges. You still need to make your repayments. It lasts longer if you're receiving mental health crisis treatment, and you can't normally use it more than once in 12 months.

What to watch out for

Paying for help you could get free. Fees on a paid DMP come out of your payments, so less reaches your creditors and the plan takes longer.
Turning unsecured debt into secured debt. Adding card debts to your mortgage changes them from non-priority to priority debts, so missing payments could then put your home at risk.
Stopping payments without advice. Creditors can still take action if they haven't agreed to a plan. Get advice first.

Key debt solution thresholds (England and Wales)

Worked example

Two people who've totalled up their debts, both renting in England.

Priya owes £36,000 on cards and loans and has £450 a month spare after priority bills and essentials. Her spare income rules out a DRO. If her creditors freeze interest (they don't have to), a DMP at £450 a month would clear the debt in £36,000 ÷ £450 = 80 months, which is 6 years and 8 months. An adviser may also compare that with an IVA, where she'd pay an affordable amount for around 5 years and the remainder would be written off, after fees.
Tom owes £15,000, has £40 a month spare and owns about £800 of belongings. That's under £50,000 of debt, under £75 spare income and under £2,000 in assets, so he's likely to qualify for a DRO. It costs £0 compared with £680 to go bankrupt, payments stop for 12 months and then the debts are written off.

Both should speak to a free adviser before anything is set up. The right answer depends on details such as assets, pensions and whether their income will change.

Bankruptcy, IVA or DRO: which is best?#

It depends on your spare income, your debts and your assets. A DRO is free but only works if you owe under £50,000, have under £75 a month spare and less than £2,000 in assets. An IVA suits people with a steady income who can repay part of the debt over about 5 years, and bankruptcy costs £680 and usually ends after 12 months.

Should I get a DMP, or add my debt to the mortgage?#

Adding unsecured debt to your mortgage turns it into a secured debt, and a secured debt becomes a priority debt because the lender can repossess your home if you fall behind. A DMP keeps the debts unsecured but takes longer and depends on creditors agreeing. Talk it through with a free debt adviser before you remortgage.

Should I use StepChange or manage my debts myself?#

StepChange is a debt charity that gives free advice and can set up debt solutions such as a DMP. You can also arrange a plan with your creditors yourself, which is free but means you deal with each creditor. Either way, avoid paying fees for a plan you could get free.

I'm 75 and in an IVA: should I consider bankruptcy?#

Speak to a debt adviser, because the answer depends on your income and assets. In bankruptcy you can usually keep money already paid into a UK pension, but pension payments you're receiving count as income and may be used to pay creditors for up to 3 years. If you can't keep up IVA payments, the insolvency practitioner can cancel it and can make you bankrupt, so get advice early.

Should I wait for my debts to default before starting a DMP?#

Don't stop paying on your own without advice. Unless creditors have agreed to a plan, they can still take action to recover the money. A free adviser can tell you whether to keep paying, pay token amounts or apply for Breathing Space while a plan is set up.

Can my wife get a DRO or go bankrupt on her own?#

A debt adviser can check whether she meets the rules in her own right. For a DRO, that means checking the debt, spare income and asset limits. In bankruptcy, the trustee asks for details of a spouse's or partner's income as well as the bankrupt person's, and a jointly owned home can be affected, so get advice together.

How do I pay off my debts with no income for a few months?#

Keep paying priority debts first, then contact your other creditors to explain and ask for reduced or paused payments. A debt adviser can apply for Breathing Space, which gives up to 60 days without interest, charges or enforcement while you plan. If your income won't recover, a DRO or bankruptcy may be more realistic.

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Sources

Figures checked against these sources on 6 October 2026. If a rule changes, we update the page and its date.

General information, not personal financial advice. Rules depend on your circumstances; check the official source or speak to a regulated adviser before acting.