UK Debt Solutions Compared: DMP, DRO, IVA & Bankruptcy

Several formal and informal routes exist for dealing with unmanageable debt in the UK, and the right one depends entirely on your circumstances. This page compares the main options in England and Wales, Northern Ireland, and Scotland, and explains why free advice should always come first.

Get Free Advice Before You Choose

The single most important step in dealing with unmanageable debt is not picking a solution yourself; it is getting free, impartial advice from an organisation with no commercial interest in which option you choose. StepChange, Citizens Advice, MoneyHelper (whose debt advice locator is linked from gov.uk/debt-advice) and National Debtline (England, Wales and Scotland) all assess your full financial situation, income, and circumstances, and explain which of the options below you actually qualify for, at no cost to you.

This matters because commercial debt-management companies often charge fees for arranging a Debt Management Plan or similar service that these charities set up for free. There is rarely a good reason to pay for something a free, regulated service already offers. This page sets out the options so you understand the landscape; it does not, and should not, tell you which one to pick. That decision depends on your total debt, your income, your assets, whether you own your home, and your nation, and is best made with a free adviser who can look at your specific numbers. In Northern Ireland, nidirect points to Advice NI and StepChange for free debt advice.

England, Wales and Northern Ireland: The Main Options

Debt Management Plan (DMP)

A DMP is an informal agreement to pay reduced, affordable amounts to your creditors, usually combined into a single monthly payment. It is not legally binding on your creditors, so they can in theory still take other action, though in practice DMPs are widely accepted. StepChange and National Debtline (England, Wales and Scotland) both arrange DMPs for free; commercial DMP providers exist too but charge fees for the same basic service.

Debt Relief Order (DRO)

A DRO is a formal, low-cost insolvency solution designed for people with relatively low debt and few assets who cannot pay off what they owe within a reasonable time. Following limits raised on 28 June 2024 (England and Wales) and 8 July 2024 (Northern Ireland), a DRO is currently available if:

• your total debts are £50,000 or less
• your spare income is £75 a month or less
• your total assets are worth £2,000 or less
• any vehicle you own is worth £4,000 or less (a vehicle adapted for a disability is generally excluded from this limit)

The £90 application fee was abolished, from 6 April 2024 in England and Wales and from 17 June 2024 in Northern Ireland, so applying costs nothing. You cannot apply directly; a DRO must be applied for through an approved debt adviser (known as an approved intermediary), who checks your eligibility and submits the application.

Individual Voluntary Arrangement (IVA)

An IVA is a formal, legally binding agreement between you and your creditors to repay some or all of your debts, usually through affordable monthly payments over a set period, typically 5 years, or 6 years if you have equity in your home. An IVA must be set up and supervised by a licensed insolvency practitioner, and it becomes binding on your creditors once the required majority approves it. See our dedicated page on the IVA process and Scotland's equivalent for more detail on how it works and what it costs.

Bankruptcy

Bankruptcy is generally a last resort for debt that cannot realistically be repaid through any other route. In England and Wales, you apply online through an adjudicator, for an application fee currently £680. GOV.UK says that if you are struggling to pay the fee, a charity may be able to help. Bankruptcy is usually discharged after 12 months, at which point most remaining unsecured debts are written off, though some assets may be sold to repay creditors first.

Northern Ireland bankruptcy is different. It is not applied for online through an adjudicator; it goes through the High Court, and the process, fees, and timescales differ from the England and Wales route. Do not assume the £680 online-adjudicator process applies in Northern Ireland; check the current Insolvency Service NI guidance for the exact figures and steps.

Breathing Space (Debt Respite Scheme)

Breathing Space is available in England and Wales only. It gives you a 60-day pause on most enforcement action, contact from creditors, and interest and charges, while you get debt advice and decide on a longer-term solution. It is started through a debt adviser, not applied for directly, and a separate, longer version exists for people receiving mental health crisis treatment. Scotland and Northern Ireland do not have a Breathing Space scheme. Scotland has its own statutory moratorium instead: it stops creditors taking action to recover what you owe for 6 months, though it does not write off debt or stop interest and charges, and you can apply yourself or through a money adviser.

Scotland: A Separate System Run by the Accountant in Bankruptcy

Scotland's debt solutions are entirely separate from those in England, Wales and Northern Ireland, run under different legislation by the Accountant in Bankruptcy (AiB). None of the DRO, IVA, Breathing Space or England-and-Wales bankruptcy routes above apply in Scotland.

Debt Arrangement Scheme (DAS)

DAS is a statutory debt payment programme that lets you repay your debts over an extended period through a single regular payment, while freezing interest, fees and charges and stopping most creditor enforcement action for as long as you keep to the plan.

Protected Trust Deed (PTD)

A PTD is Scotland's rough equivalent of an IVA: a formal, voluntary arrangement with your creditors, set up with the help of an insolvency practitioner (in Scotland, a trustee), that can become binding on creditors once enough of them agree.

Minimal Asset Process (MAP)

MAP is a low-cost route into sequestration (see below) aimed at people on a low income with few assets. Broadly, it is aimed at people with debts of no more than £25,000 (the former £1,500 minimum was removed in February 2023), with total assets of no more than £2,000 and no single asset worth more than £1,000, though you should check the current thresholds with AiB or a free adviser before assuming you qualify. AiB has reduced or removed application fees for sequestration in recent years, including for MAP, so check the current AiB fee position rather than relying on an older figure.

Sequestration

Sequestration is the Scottish equivalent of bankruptcy, sometimes called Full Administration when it is not being handled through the lower-cost MAP route. It is run by the Accountant in Bankruptcy, and, like bankruptcy in England and Wales, it can result in your assets being used to repay creditors before your remaining qualifying debts are discharged.

Comparing the Options at a Glance

How to Choose: Get Free Advice, Not a Guess

This page deliberately does not recommend one option over another, because the right choice depends on facts specific to you: your total debt, your income and spare capacity to pay, what assets and equity you have, whether you own your home, and which nation's system applies to you. Two people with similar-looking debts can need completely different solutions.

The safe, free way to work this out is to talk to StepChange, Citizens Advice, MoneyHelper, National Debtline (England, Wales and Scotland) or, in Northern Ireland, Advice NI before you sign anything or pay anyone. They can look at your full financial picture, explain which of the options above you are actually eligible for, and set up an informal solution like a DMP directly, all at no cost. If your situation needs a formal insolvency route such as a DRO, IVA, bankruptcy, DAS, PTD, MAP or sequestration, a free adviser can also point you to how to apply and what it will mean for your credit file, your assets, and your creditors, before you commit to anything.

If you are being chased for a debt or worried about enforcement while you work out your options, see our pages on debt collection rules and statute-barred debt. For the full per-nation picture on money claims and debt options, see the UK debt and money hub and the United Kingdom country hub.

This article is general information about the main debt solutions available in England, Wales, Scotland and Northern Ireland, not financial or legal advice, and it does not recommend any one option. Eligibility, fees, and thresholds change over time and depend on your individual circumstances, so get free, independent guidance from StepChange, Citizens Advice, MoneyHelper, National Debtline (England, Wales and Scotland) or Advice NI (Northern Ireland) before choosing or applying for any debt solution.

Frequently Asked Questions

What is the difference between a Debt Management Plan and a Debt Relief Order?

A Debt Management Plan (DMP) is an informal, flexible arrangement to pay reduced amounts to your creditors over time; it is not legally binding and can be arranged for free by a charity such as StepChange or National Debtline. A Debt Relief Order (DRO) is a formal, legally binding insolvency solution for people with low debt, low income and low assets, applied for through an approved debt adviser.

Who is eligible for a Debt Relief Order in England, Wales or Northern Ireland?

You generally need total debts of no more than £50,000, spare income of no more than £75 a month, and assets worth no more than £2,000, with a car worth up to £4,000 excluded from that limit. You apply through an approved debt adviser rather than directly to a court, and there is no longer an application fee.

What is an IVA and how long does it last?

An Individual Voluntary Arrangement (IVA) is a formal agreement with your creditors, set up and supervised by a licensed insolvency practitioner, to repay some or all of your debts over a set period, typically five to six years. It becomes binding on creditors once the required majority approves it.

Does Scotland have a Debt Relief Order or an IVA?

No. Scotland has its own separate system run by the Accountant in Bankruptcy. The rough equivalent of an IVA is a Protected Trust Deed (PTD), and Scotland also has the Debt Arrangement Scheme (DAS), the Minimal Asset Process (MAP) for low-income, low-asset debtors, and sequestration. None of the England, Wales and Northern Ireland options described here apply in Scotland.

Is Breathing Space available in Scotland or Northern Ireland?

No. The Breathing Space (Debt Respite Scheme), a 60-day pause on enforcement action and most interest, is only available in England and Wales. Scotland has its own statutory moratorium, which stops creditors taking action to recover what you owe for 6 months but does not stop interest or charges. Northern Ireland does not have a Breathing Space scheme.

How much does bankruptcy cost in England and Wales?

Bankruptcy in England and Wales is applied for online through an adjudicator for a £680 application fee (GOV.UK says a charity may be able to help if you are struggling to pay it), and it is usually discharged after 12 months. Northern Ireland's bankruptcy process goes through the High Court rather than an online adjudicator, and its process and fees differ, so do not assume the England and Wales figures apply there.

Which debt solution should I choose?

This page does not recommend one option, because the right solution depends on your total debts, income, assets, and personal circumstances. Get free, impartial advice from StepChange, Citizens Advice, MoneyHelper, National Debtline (England, Wales and Scotland) or Advice NI (Northern Ireland) before deciding; they can assess your situation and explain which options you are eligible for.

Do I have to pay for debt advice?

No. StepChange, Citizens Advice, MoneyHelper, National Debtline (England, Wales and Scotland) and Advice NI (Northern Ireland) all provide free debt advice, and some of them, such as StepChange, can set up a DMP for free. Commercial debt-management companies can charge fees for services these charities provide at no cost, so always check the free options first.