UK Debt Solutions Explained

Every debt solution has advantages and disadvantages. Whether any is suitable depends on your circumstances. This is general information, not advice.

Debt Management Plan (DMP)

An informal arrangement to repay non-priority debts with one monthly payment. Creditors don't have to agree or freeze interest, it can take longer to clear debts, and missed payments affect your credit file. Some providers charge fees; free DMPs are available from debt charities.

Individual Voluntary Arrangement (IVA)

A legally binding agreement (England, Wales, NI) to pay what you can afford for a set period, usually 5–6 years, after which remaining included debt is written off. Fees apply. It's recorded on your credit file for six years and on the public Insolvency Register. Homeowners may be asked to release equity. If you can't keep up payments, the IVA may fail and you could be made bankrupt.

Debt Relief Order (DRO)

For people with low surplus income, limited assets and debts below a set limit (England, Wales, NI). Debts are usually written off after 12 months. Credit file and public register entries apply, and there are restrictions during the order.

Bankruptcy

Can write off most debts but has serious consequences, including possible loss of your home and assets, restrictions on credit and some professions, and public record entries.

Scotland

Options differ, including the Debt Arrangement Scheme (DAS), Protected Trust Deeds, Minimal Asset Process and sequestration.

Other options

Breathing Space (a temporary pause on most creditor action and interest), budgeting help, token payments and negotiating directly with creditors.

Free, impartial advice is available from MoneyHelper, StepChange and National Debtline.