IVA or debt relief order?
If you meet the criteria for a debt relief order, the IVA Protocol 2025 says you are unlikely to be suitable for a protocol IVA. A DRO is free, lasts 12 months and needs no monthly payments. An IVA is for people with more income, more debt or assets that rule out a DRO.
Most people only have a real choice between the two if they are close to one of the DRO limits. This page explains the differences, why the IVA Protocol points DRO-eligible people away from IVAs, and what to think about if you are just over a limit.
It is general information, not a recommendation. Free, impartial debt advice is available from MoneyHelper, StepChange, Citizens Advice and National Debtline, and many of those advisers can apply for a DRO for you. See where to get free debt advice.
The key differences
Figures are for England and Wales, checked in September 2026.
| Debt relief order | IVA | |
|---|---|---|
| Who it is for | Low income, few assets | Regular income with money left after essential costs |
| Debt level | Under £50,000 | No legal minimum or maximum. The IVA Protocol’s usual profile is £7,000 or more (guidance) |
| Spare income | Under £75 a month | Enough for a sustainable monthly payment |
| Assets | Under £2,000, plus a vehicle under £4,000 | Can have assets, including a home |
| Cost | Free since 6 April 2024 | Fees from your payments, no legal cap. Citizens Advice says around £5,000 on average |
| How long | 12 months | Usually 60 or 72 months |
| Monthly payments to creditors | None | Yes, for the whole IVA |
| Who deals with it | Official Receiver, through an approved debt adviser | A licensed insolvency practitioner |
| Company director | Not without the court’s permission | No legal bar |
| Credit file | 6 years from approval | Usually 6 years from the start |
| Individual Insolvency Register | Removed 3 months after it ends | Removed about 3 months after it ends |
Both are legally binding once made, and both write off the included debts at the end if you keep to the terms. Neither covers secured debts such as a mortgage.
Why the IVA Protocol says DRO-eligible people are unlikely to suit an IVA
The IVA Protocol 2025 is a standard framework for consumer IVAs. It lists situations where a protocol IVA is unlikely to be suitable, and one of them is simply that the person meets the criteria for a DRO. Others include very low disposable income and income mainly from state benefits or state pension.
The reason is straightforward. A DRO costs nothing and is over in a year. An IVA costs thousands of pounds in fees, taken from your payments over 5 or 6 years. If your income is low enough for a DRO, very little of an IVA payment would ever reach your creditors, and you would carry the risk of the IVA failing for years.
For example, someone who rents, has a car worth £3,500, owes £18,000 and has £60 a month spare appears to be within the DRO limits. An IVA at £60 a month for 60 months would bring in £3,600 in total. Citizens Advice puts average IVA fees at around £5,000, which shows why very low payments rarely make an IVA workable. This example is hypothetical.
This matters because it has gone wrong before. Insolvency Service research published in October 2024, looking at IVAs that were set up and then failed between 2021 and 2023, found evidence of poor practice in the early stages of 60% of them, including other debt solutions being wrongly dismissed.
What if you are just over a DRO limit?
This is where people most often need careful advice. Common situations:
- Debts just over £50,000: a DRO is not possible. Bankruptcy, an IVA or a debt management plan may be.
- £75 or more a month spare: check that your budget includes everything you genuinely spend, such as school costs, travel to work and irregular bills. But it has to be accurate: knowingly or recklessly giving false information in a DRO application is a criminal offence.
- A car worth more than £4,000: the test is what it would sell for today, not what you paid.
- Savings or a lump sum: anything that takes your assets to £2,000 or more rules out a DRO. Do not spend it or give it away to get under the limit without advice. The adviser will ask about anything valuable you have sold or given away in roughly the last 2 years.
- A home with equity: in practice a homeowner with real equity will not qualify.
If anyone suggests you change your figures so that you “fit” one option or another, walk away. The FCA warns that consumers should not be coached into misrepresenting their income and spending.
Want to know whether an IVA could work for you? Answer a few questions about your debts and income. It takes about 3 minutes, and it is free and confidential.
When an IVA can make more sense
An IVA is more often considered when a DRO is not available: when your debts are higher, your income leaves a meaningful amount after essential costs, or you own a home. It can also suit people who need to stay a company director, since a DRO stops that unless the court agrees.
Under the IVA Protocol 2025, homeowners in a protocol IVA are not asked to sell or release equity, though equity of £10,000 or more makes the IVA last 72 months instead of 60. An insolvency practitioner will assess whether an IVA is suitable. The main points to weigh are in our IVA pros and cons guide and our guide to IVA fees.
Northern Ireland and Scotland
Both options exist in Northern Ireland, where the DRO limits are now broadly the same as in England and Wales. Scotland has neither: the nearest equivalents are the Minimal Asset Process (a low-cost route into bankruptcy) and the Protected Trust Deed. See debt solutions in Scotland.
What to do next
- Check yourself against the DRO limits with honest figures.
- If you are within them, contact a free debt adviser who is an approved intermediary.
- If you are clearly outside them, compare the other options in debt solutions compared or IVA or bankruptcy?. If you use our checker, we may pass your details to a licensed insolvency practitioner or debt adviser.
Common questions
Can I have a DRO and an IVA at the same time?
No. You cannot get a DRO while you are in an IVA. If your IVA ends early and you meet the DRO criteria then, a debt adviser can look at a DRO.
My IVA is struggling. Could I switch to a DRO?
Possibly, if your IVA ends and your circumstances meet the DRO limits. Talk to your IVA supervisor and a free debt adviser before you stop paying, because a failed IVA has consequences of its own.
Is a DRO worse for my credit file than an IVA?
They are similar. Both usually stay on your credit file for 6 years from the start and both go on the public Individual Insolvency Register. A DRO comes off the register sooner because it only lasts 12 months.
Related guides
- Debt relief orders: who qualifies and how they work A free 12-month order that writes off debts for people with low income and few assets.
- Who qualifies for an IVA? Minimum debt, spare income, benefits, homeowners and the situations where an IVA rarely fits.
- How much does an IVA cost? The fees in an IVA, how they are taken from your payments, and how that compares with other options.