Pick the wrong one and you either pay five years for something you could have had written off in twelve months, or you apply for a DRO you were never eligible for.
Short answer: A DRO is for people with almost nothing left each month: debts under £50,000, less than £75 spare income, under £2,000 in assets, no home owned. It is free and lasts 12 months. An IVA is for people who can pay something: it usually runs five or six years, has fees, and writes off what is left at the end. Spare income and owning a home decide most cases.
Based on GOV.UK on DROs, GOV.UK on IVAs, StepChange on IVAs and National Debtline on IVAs. This covers England and Wales. Scotland and Northern Ireland use different processes. For every option see the UK debt help hub.
The two side by side
| DRO | IVA | |
|---|---|---|
| Debt limit | Under £50,000 | No general limit |
| Spare income | Under £75 a month | Usually £80+ a month |
| Assets | Under £2,000 | Counted; home equity matters |
| Cost | No fee | Fees in payments, £3,650 avg |
| Length | 12 months | 5 years, 6 if equity £10k+ |
| Own your home? | Rules DRO out | Possible |
| Set up by | Approved adviser | Insolvency practitioner |
| Credit file | 6 years | 6 years from start |
Sources for the table: GOV.UK DRO, National Debtline IVA, Insolvency Service blog, StepChange IVA and mortgage. The £3,650 figure dates from 2023 so ask for a written quote.
When a DRO is the one
You have no real spare money, no home to own, and your debts are under £50,000. GOV.UK says payments on your debts, including interest, stop for 12 months and you no longer have to pay them afterwards (GOV.UK). Rent and bills are not covered, and certain debts such as student loans and court fines are excluded.
The rules bite during the year. You cannot borrow more than £500 without telling the lender, act as a company director, or open a bank account without telling the bank. Breaking them can mean prosecution, and the DRO can be extended (GOV.UK). It can also be cancelled if your finances improve.
When an IVA is the one
You can pay something regular, or you own a home, or your debts are over the DRO limit. You pay one monthly amount to an insolvency practitioner who shares it among creditors. If creditors holding 75% of your debts agree, it binds all of them, including those who voted no (GOV.UK). StepChange says unsecured debts in the IVA are written off at the end (StepChange).
The Insolvency Service counts how many people take each route. In the 12 months to September 2026, IVAs made up 59% of individual insolvencies in England and Wales and DROs 35%, with IVAs up 17% on a year earlier and DROs down 3% in September. The figures are in our debt statistics page.
Illustration, ours, not a quote: £250 a month for five years is £15,000 paid in, with fees coming out of that money. Your own figures will differ. That is why the monthly sum, not the headline debt, decides whether an IVA is sensible. Run the cost of minimum payments in the minimum payment trap calculator for comparison, and read the IVA pros and cons.
Homeowners: StepChange says you do not have to sell your home, and your mortgage is usually kept out of the IVA. Lenders count 85% of the property value minus what you owe, and equity above £10,000 may stretch the IVA to six years (StepChange).
The risk nobody mentions on the adverts
A DRO has no monthly payment to miss. An IVA does, for years. If it fails, the practitioner can cancel it and can make you bankrupt (GOV.UK). National Debtline warns that you may not get credit for everything you paid, because interest and charges can be added back (National Debtline). So be honest on the budget form. A payment you can only just afford is the one that gets missed. If a job or hours could change, say so. Not paying while you decide? Read what happens first.
Other options on the table: a debt management plan and breathing space, which can pause most enforcement and interest while you get advice. Free advice from StepChange or National Debtline comes first. Be wary of anyone who charges to arrange a DRO, since GOV.UK says it costs nothing.
Questions people ask at 2am
Can I get a DRO if I own my home?
Not usually. GOV.UK lists owning your home as something that rules a DRO out (GOV.UK). If you own your home, an IVA is the more likely route, and your mortgage normally stays outside it (StepChange).
What if I have £90 a month spare, is that too much for a DRO?
Yes. The DRO limit is less than £75 a month spare income after essential costs (GOV.UK). National Debtline says its IVA route usually needs at least £80 a month spare (National Debtline). Anything in the gap needs an adviser to run your real budget, not a guess.
Do I pay anything to get a DRO?
No. GOV.UK says there is no fee (GOV.UK). You apply through an approved debt adviser, not on your own.
What happens if I can’t keep up IVA payments?
Your insolvency practitioner can cancel the IVA and can make you bankrupt (GOV.UK). National Debtline adds that creditors can add back interest and charges that built up, so the debt may not fall by what you paid in (National Debtline).
Will either wreck my credit for good?
Both sit on your credit file for six years from the start date (GOV.UK; National Debtline). They come off the public Individual Insolvency Register 3 months after they end (GOV.UK).
Can I get a DRO twice?
Not within 6 years of a previous one (GOV.UK).
Is a DMP just easier than both?
It is gentler, but it is not legally binding and creditors do not have to agree. An IVA binds them (StepChange). See debt management plans.
Disclaimer: DebtShift is an educational platform operated by H Ali Logistics Ltd, which is not authorised or regulated by the Financial Conduct Authority (FCA). This article is general education, not financial or legal advice. For free, impartial debt advice, contact StepChange on 0800 138 1111.
Sources
- GOV.UK, Debt Relief Orders
- GOV.UK, Individual Voluntary Arrangements
- StepChange, IVA or DMP
- StepChange, IVA and mortgage
- National Debtline, IVA guide
- Insolvency Service blog, IVAs (Feb 2023)
Last reviewed October 2026
Keep reading
- IVA Pros and Cons UK: Is an Individual Voluntary Arrangement Right for You? (2026)
- How to Write Off Debt in the UK (Your Legal Options 2026)
- Debt Management Plan UK: How to Pay What You Can Afford
- Breathing Space Scheme UK: Stop Debt Collectors Legally (2026)
- How Bankruptcy Works in the UK in 2026
- Bankruptcy vs DRO: Which Is Right for You in 2026?
- Debt Statistics 2026: UK and US Household Debt Figures
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