Start with free, regulated advice
For large debts, the best first step is always free, impartial advice from a regulated charity — they'll assess your whole situation and recommend the right solution, free of charge. Never pay a fee-charging firm for what charities provide free. Start with StepChange, Citizens Advice or National Debtline.
1. Debt Management Plan (DMP)
An informal plan where you make one reduced monthly payment, distributed to creditors who may freeze interest. Best for debts you can repay over time at a lower monthly amount. Flexible and not legally binding, but not all creditors must agree.
2. Individual Voluntary Arrangement (IVA)
A formal, legally binding agreement to pay what you can over (typically) five years, after which remaining qualifying debt is written off. Best for larger debts you can't fully repay but can make some contribution toward. Major credit impact and strict terms — only via a licensed insolvency practitioner.
3. Debt Relief Order (DRO)
For people with low income, few assets and debts under a set threshold, a DRO freezes then writes off qualifying debts after 12 months. Best for those who meet the strict eligibility criteria. Low cost but limited to smaller total debts.
4. Bankruptcy
A formal insolvency that writes off most debts but has the most serious consequences for assets and credit. Best as a last resort for unmanageable debt with no realistic repayment route. Always take regulated advice first.
5. Breathing Space
Not a solution itself, but the government's Breathing Space scheme gives 60 days of legal protection from interest and creditor action while you get advice and decide. Best as a first move while you weigh up options.
Choosing the right solution
- Can repay over time at a lower amount: DMP
- Large debt, some ability to pay: IVA
- Low income, few assets, smaller debt: DRO
- No realistic repayment route: bankruptcy (last resort)
A note on consolidation
For large but still manageable debts, a consolidation loan may reduce interest and simplify payments — but taking on new borrowing isn't right if you're already struggling. Get advice first. If consolidation is appropriate, find a debt specialist through Nesto — free, no obligation.
Frequently asked questions
What's the best solution for unmanageable debt?
It depends on your income, assets and debt size — a DMP, IVA, DRO or bankruptcy. Free regulated advice will identify the right one.
Will these solutions write off my debt?
IVAs, DROs and bankruptcy can write off qualifying debt; a DMP repays it in full at a lower monthly rate. Each has different credit consequences.
Should I pay a company to set up an IVA or DMP?
DMPs are free via charities. IVAs require a licensed insolvency practitioner — get free advice first so you understand all options before committing.
How long do these stay on my credit file?
Typically six years for IVAs, DROs and bankruptcy. A DMP affects your file while active. All seriously impact future borrowing.
What is Breathing Space?
A government scheme giving 60 days' legal protection from interest and creditor action while you seek advice and decide on a solution.