Is a DRO Better Than an IVA in 2025?
DRO vs IVA, when struggling with unmanageable debt, two of the most common solutions are a Debt Relief Order (DRO) and an Individual Voluntary Arrangement (IVA). With changes coming into effect in 2025, including an increased DRO debt limit of £50,000 and a higher vehicle value threshold of £4,000, many people are wondering: is a DRO better than an IVA?
Key Differences Between a DRO vs IVA
Both options help you manage debt, but they work in very different ways:
Debt Relief Order (DRO)
- Now available for debts up to £50,000 (previously £30,000).
- Your car can now be worth up to £4,000 (previously £2,000).
- Lasts 12 months and, if your financial situation doesn’t improve, debts are written off.
- Low-cost solution, with now no one off fee (previously one-off fee of £90.)
- Strict eligibility: you must have little to no spare income and minimal assets.
Individual Voluntary Arrangement (IVA)
- Suitable for debts typically over £6,000.
- Lasts 5–6 years with monthly repayments based on what you can afford.
- Protects assets such as your home (if you’re a homeowner).
- May allow you to retain more financial control than a DRO.
- Some disposable income is required to make payments.
Which One Is Better for You DRO vs IVA?
The answer depends on your circumstances. If you have minimal assets, no disposable income, and debts under £50,000, a DRO could be the best option. However, if you can afford some level of repayment and want to protect certain assets, an IVA might be more suitable.
Check If You’re Eligible of a DRO vs IVA
It’s essential to explore your options before making a decision. The best way to find out if a DRO vs IVA suits you is to check your eligibility. Use our quick form below to see what solution you qualify for.
Frequently Asked Questions
Will a DRO or an IVA affect my credit score?
Both a DRO and an IVA will impact your credit rating for six years from the date they start. Lenders will see these markers on your credit file, which may affect your ability to obtain credit during this period. However, for many, the benefit of becoming debt-free outweighs the temporary credit limitations.
Can I apply for a DRO or IVA if I am self-employed?
Yes, but there are considerations. A DRO is generally more suitable for those with low income and minimal assets, whereas an IVA may be better suited if you have a steady self-employed income. An IVA allows you to continue trading while making affordable repayments.
What happens if my financial situation improves?
If you enter a DRO and your income increases significantly within the 12-month period, you must report it, and the DRO may be revoked. In an IVA, you will usually be required to contribute more if your disposable income increases.
What debts can be included in a DRO or an IVA?
Both options cover unsecured debts like credit cards, loans, and overdrafts. However, priority debts such as child support, court fines, and student loans cannot be included. Checking your eligibility will clarify which debts can be covered.
Take the Next Step DRO vs IVA
Deciding between a DRO and an IVA can be difficult, but you don’t have to do it alone. Our team at Swift Debt Help is here to guide you through your options. Click below to check your eligibility and take control of your financial future.
See what you qualify for today