IVA or Debt Relief Order? The main differences
This guide covers England and Wales
The short answer
An IVA is an agreement you pay into for years. A Debt Relief Order (DRO) lets you stop paying the debts in it for 12 months, but only if you meet strict rules.
A DRO has no application fee. An IVA has fees. This page does not say which one is right for you.
Editorial responsibility: IVAs & Bankruptcy — how we check and correct information.
The comparison
We ask the same questions about each option. Neither one is shown as the better choice.
| Question | IVA | Debt Relief Order (DRO) |
|---|---|---|
| What is it? | A legal agreement with your creditors to pay all or part of your debts through regular payments. | A way to deal with debts you cannot pay. You stop making payments towards the debts in it, and at the end you do not have to pay them. |
| Who can have one? | A standard (protocol) IVA is for combined debts of £7,000 or more. It needs a regular income that does not come only from benefits or a state pension. | You owe less than £50,000 in total. Your savings and valuables are worth less than £2,000. Any vehicle is worth less than £4,000. You do not have enough money left each month to repay your debts. You have not had a DRO in the last 6 years. GOV.UK also says a DRO is for people who do not own their home. |
| Who sets it up? | A licensed insolvency practitioner. It starts if creditors owed at least 75% of your debts agree. | An approved debt adviser applies for you to the Insolvency Service. You cannot apply on your own. You do not go to court. |
| What does it cost? | No set price. Fees are taken from your monthly payments, not upfront. Early payments cover more fees than debt. | no application fee. |
| Do I keep making payments? | Yes. You pay a set amount each month, and it is reviewed every year. | No, not towards the debts in the DRO. You still pay your rent and bills. |
| How long does it last? | A standard (protocol) IVA usually lasts 5 years, or 6 years if your home equity is £10,000 or more. | 12 months. It can be extended in some cases. |
| Could it affect my home? | Under the protocol, you do not need to sell your home or use its equity to pay for the IVA. Payments last longer if your equity is high. Other IVAs can differ. | GOV.UK says a DRO is for people who do not own their home. A debt adviser checks this with you. |
| What shows on my credit file? | 6 years from the date the IVA starts. | Usually 6 years from the date the DRO is approved. |
| Is it public? | Yes. On the Individual Insolvency Register until 3 months after it ends. | Yes. On the Individual Insolvency Register until 3 months after it ends. |
| What rules do I follow? | For example, no credit over £500 without written approval. You report changes in your pay and tell your practitioner about windfalls. | For example, you cannot borrow more than £500 without telling the lender. You cannot act as a company director. If you break the rules they can be extended by 2 to 15 years. |
| Which debts does it cover? | It applies to all your creditors, including any who said no. | Most personal debts, such as cards, loans and utility arrears. Not child maintenance, student loans, debts secured on things you own, or unpaid TV licence fees. |
IVA and Debt Relief Order side by side
What is it?
- IVA
- A legal agreement with your creditors to pay all or part of your debts through regular payments.
- Debt Relief Order (DRO)
- A way to deal with debts you cannot pay. You stop making payments towards the debts in it, and at the end you do not have to pay them.
Who can have one?
- IVA
- A standard (protocol) IVA is for combined debts of £7,000 or more. It needs a regular income that does not come only from benefits or a state pension.
- Debt Relief Order (DRO)
- You owe less than £50,000 in total. Your savings and valuables are worth less than £2,000. Any vehicle is worth less than £4,000. You do not have enough money left each month to repay your debts. You have not had a DRO in the last 6 years. GOV.UK also says a DRO is for people who do not own their home.
Who sets it up?
- IVA
- A licensed insolvency practitioner. It starts if creditors owed at least 75% of your debts agree.
- Debt Relief Order (DRO)
- An approved debt adviser applies for you to the Insolvency Service. You cannot apply on your own. You do not go to court.
What does it cost?
- IVA
- No set price. Fees are taken from your monthly payments, not upfront. Early payments cover more fees than debt.
- Debt Relief Order (DRO)
- no application fee.
Do I keep making payments?
- IVA
- Yes. You pay a set amount each month, and it is reviewed every year.
- Debt Relief Order (DRO)
- No, not towards the debts in the DRO. You still pay your rent and bills.
How long does it last?
- IVA
- A standard (protocol) IVA usually lasts 5 years, or 6 years if your home equity is £10,000 or more.
- Debt Relief Order (DRO)
- 12 months. It can be extended in some cases.
Could it affect my home?
- IVA
- Under the protocol, you do not need to sell your home or use its equity to pay for the IVA. Payments last longer if your equity is high. Other IVAs can differ.
- Debt Relief Order (DRO)
- GOV.UK says a DRO is for people who do not own their home. A debt adviser checks this with you.
What shows on my credit file?
- IVA
- 6 years from the date the IVA starts.
- Debt Relief Order (DRO)
- Usually 6 years from the date the DRO is approved.
Is it public?
- IVA
- Yes. On the Individual Insolvency Register until 3 months after it ends.
- Debt Relief Order (DRO)
- Yes. On the Individual Insolvency Register until 3 months after it ends.
What rules do I follow?
- IVA
- For example, no credit over £500 without written approval. You report changes in your pay and tell your practitioner about windfalls.
- Debt Relief Order (DRO)
- For example, you cannot borrow more than £500 without telling the lender. You cannot act as a company director. If you break the rules they can be extended by 2 to 15 years.
Which debts does it cover?
- IVA
- It applies to all your creditors, including any who said no.
- Debt Relief Order (DRO)
- Most personal debts, such as cards, loans and utility arrears. Not child maintenance, student loans, debts secured on things you own, or unpaid TV licence fees.
This compares the main points only. It describes England and Wales. It cannot tell you whether you meet the DRO rules or whether an IVA could work for you. An adviser checks those with you.
A free debt adviser can help you understand which options fit your situation. Find free help
One thing the Insolvency Service says
The IVA protocol says someone who meets the rules for a Debt Relief Order is unlikely to suit a standard protocol IVA. If a practitioner goes ahead anyway, the proposal must explain why. This is one reason to get free advice before you agree to an IVA.
Other options to know about
- Bankruptcy, a legal process that usually ends after 12 months. See IVA or bankruptcy?
- Breathing Space, which gives up to 60 days of protection while you get advice.
- A Debt Management Plan, or an informal agreement with your creditors. See the overview.
What to do next
You cannot apply for a DRO on your own. An approved debt adviser checks the rules with you, and applies for you if a DRO is possible. That help is free.
Free, independent debt advice
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Related guides
- What is a Debt Relief Order?The full guide.
- What is an IVA?The full guide.
- What does an IVA cost?Fees explained.
- IVA or bankruptcy?Another comparison.
- All your debt optionsThe overview.
Sources
- Insolvency Service: How to get a Debt Relief Order (DRO) (checked )
- GOV.UK: Options for dealing with your debts, Debt Relief Orders (checked )
- Insolvency Service: IVA protocol key facts (for people thinking of an IVA) (checked )
- Insolvency Service: IVA protocol 2025 (checked )
- Insolvency Service: IVA protocol 2025, standard terms and conditions (checked )
- GOV.UK: Options for dealing with your debts, IVAs (checked )