There is no single solution that works for everyone. The right approach depends on how much you owe, your income, your assets and your personal circumstances. Here are the main options available in the UK right now.
Individual Voluntary Arrangements (IVAs)
An IVA is a legally binding agreement between you and your creditors. You agree to make affordable monthly payments over a fixed period, typically five or six years, and at the end any remaining qualifying debt is written off. IVAs are governed by the Insolvency Act 1986 and must be set up through a licensed insolvency practitioner.
Key benefits of an IVA include: creditors must stop contacting you once it is in place, interest and charges are frozen, and you only pay what you can realistically afford. For many people with debts over £6,000 across multiple creditors, an IVA is one of the most effective routes to becoming debt free. You can check if you qualify using our Solution Finder tool.
Debt Management Plans (DMPs)
A Debt Management Plan is an informal arrangement where a provider negotiates reduced payments with your creditors on your behalf. DMPs are more flexible than IVAs because they are not legally binding, meaning you can adjust payments if your circumstances change. However, they do not offer the same legal protections.
Setting up a DMP is straightforward. Your provider assesses your income and essential outgoings, works out what you can afford, and contacts your creditors to propose the new payment amounts. Many debt charities, including StepChange, offer free DMP services.
Debt Relief Orders (DROs)
If you owe less than £30,000, have minimal assets and a low income, a Debt Relief Order could be right for you. DROs last for 12 months, and if your circumstances have not improved by the end, your debts are written off entirely. The application fee is £90. You can find out more about which debts can be included in a DRO on our blog.
Bankruptcy
Bankruptcy is often seen as a last resort, but for some people it genuinely is the best option. It clears most unsecured debts and gives you a fresh start, though it does come with serious consequences for your credit file and potentially your assets. The current application fee for bankruptcy in England and Wales is £680. You can read more about common bankruptcy myths to separate fact from fiction.
Debt Consolidation
Combining multiple debts into a single loan with a lower interest rate can simplify your repayments and reduce overall costs. This works best if you have a reasonable credit score and can access competitive rates. Be cautious with secured consolidation loans, as your home could be at risk if you fall behind on payments.