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Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
Debt management plans, IVAs, bankruptcy and debt relief orders (DROs) all exist to help people deal with debt they can’t otherwise manage, but they work in quite different ways, particularly when it comes to your home and your credit file. None of them is automatically the “right” choice; the best option depends on your income, assets, and how much you owe.
This guide compares the four side by side so you can see the main differences before getting advice about your own circumstances. It’s a starting point for understanding the options available, not a substitute for speaking to a free debt adviser who can look at your full financial picture.
The four options at a glance
| Debt management plan | IVA | Bankruptcy | Debt relief order | |
|---|---|---|---|---|
| Legal status | Informal | Formal, binding once approved | Formal, binding | Formal, binding |
| Typical duration | Until debts are repaid, no fixed term | Usually 5 to 6 years | Usually discharged after 12 months | 12 months |
| Debts covered | Unsecured | Unsecured | Most debts, with some exceptions | Unsecured, within eligibility limits |
| Effect on your home | Mortgage not included; arrears sit alongside it | Not automatically included, though many include an equity release clause | Your interest can pass to a trustee | Generally unlikely to apply if you own a home with equity |
| Credit file record | Individual account markers, not the plan itself | 6 years from the start date | 6 years from the bankruptcy date | 6 years from approval |
| Can creditors refuse? | Yes, each decides individually | No, once approved | No | No |
Debt management plan (DMP)
A DMP is an informal arrangement where you make one affordable monthly payment, shared between your unsecured creditors. It has no legal backing, so each creditor decides separately whether to accept it, freeze interest, or take other action. Our guide on what is a debt management plan covers how it works in full, and it’s often the option people move to or from when comparing formal alternatives.
Individual voluntary arrangement (IVA)
An IVA is a formal, legally binding arrangement, usually running 5 to 6 years, where creditors agree to a reduced payment plan in exchange for writing off the remaining unsecured balance once it completes. Your home isn’t automatically included, but many IVAs include a clause asking you to try to release equity, often towards the end of the term. Our guide on what is an IVA explains the basics, and our guide on what happens to your home in an IVA covers the equity release clause specifically.
Bankruptcy
Bankruptcy is the most far-reaching of the four. It’s usually discharged after 12 months in England and Wales, but your interest in assets, including your home, can pass to a trustee as part of the process. Our guide on what happens to your home in bankruptcy explains this, including a 3-year rule that can return your main home to you if the trustee hasn’t dealt with it.
Debt relief order (DRO)
A DRO is a lower-cost, shorter option aimed at people with a low income and very few assets, running for just 12 months. It’s generally unlikely to apply if you’re a homeowner with meaningful equity, since the eligibility limits are built around low asset levels. Our guide on what is a debt relief order covers who typically qualifies.
How they differ if you’re a homeowner
For most homeowners, the practical choice usually narrows to a DMP or an IVA, since a DRO is unlikely to be available and bankruptcy carries the most significant risk to your home through the trustee’s involvement. Between a DMP and an IVA, the main trade-off is that a DMP is flexible and can be stopped at any time but isn’t binding on creditors, while an IVA is binding but comes with more formal obligations, potentially including the equity release clause described above. Our guide on DMP or IVA: what’s the difference goes into this comparison specifically.
How much you owe relative to your income often points towards one option over another in practice. Smaller unsecured debts alongside reasonable income may be manageable through a DMP, while larger unsecured balances that would take many years to clear informally are more often addressed through an IVA instead. Neither figure is a fixed threshold, and a debt adviser can help work out which fits your actual numbers.
What this means if you’re thinking about remortgaging to deal with debt
Some homeowners consider remortgaging specifically to raise money to clear debts covered by one of these solutions, rather than entering or continuing with the arrangement itself. This is worth discussing with an adviser, but it means turning unsecured debt into debt secured against your home, and a longer mortgage term can mean paying more overall even if the monthly figure looks lower. Our page on debt consolidation remortgages sets this risk out in full.
If you already have one of these arrangements in place and want to understand how it affects a future mortgage, our pages on remortgaging with a debt management plan, remortgaging after an IVA and remortgaging after bankruptcy each explain what lenders and advisers typically want to see.
Where to get help
Choosing between these options is a decision worth making with proper advice rather than alone. MoneyHelper, StepChange and National Debtline all offer free, impartial guidance and can help you work out which, if any, of these solutions fits your circumstances.
Frequently asked questions
Which debt solution is best for homeowners?
There's no single best option, it depends on your income, the amount you owe, your assets and your own circumstances. A debt management plan and an IVA don't automatically involve your home, while bankruptcy can, and a DRO is generally aimed at people with very few assets. A free debt adviser can assess your situation properly.
Which of these options is legally binding on creditors?
An IVA, bankruptcy and a DRO are all formal, legally binding processes once approved. A debt management plan is informal, so each creditor decides individually whether to accept the reduced payments, and none is obliged to.
Do all of these show on your credit file the same way?
Formal insolvency procedures, an IVA, bankruptcy and a DRO, are all recorded for 6 years, though from slightly different starting points. A DMP itself isn't recorded, but the individual accounts included may still show markers such as missed payments or defaults.
Can you switch between these options?
Sometimes, depending on your circumstances and how far along you are. For example, someone struggling with a DMP might consider an IVA, or an IVA that's failing might lead to bankruptcy. A debt adviser can talk through whether switching makes sense in your situation.