What is the difference between a DMP, an IVA and a DRO?

Short answer

A DMP is informal — you repay in full at a rate you can afford and creditors can opt out. An IVA is a formal five-year arrangement, binding on everyone once creditors holding 75% of the debt agree. A DRO writes off debts up to £50,000 after 12 months if you have almost nothing.

All three deal with unsecured debts — credit cards, personal loans, overdrafts — but they differ in whether creditors can walk away, how long they last, and whether anything is written off at the end.

The three compared

DMP (debt management plan) — informal. An adviser works out what you can afford after essential living costs, you make one monthly payment and it is shared pro rata between your creditors. Most mainstream lenders cooperate and freeze interest, but none of them has to: a creditor can refuse, sell the debt on, or still obtain a CCJ. You repay in full, so plans often run for years.
IVA (individual voluntary arrangement) — formal and legally binding, set up by a licensed insolvency practitioner and typically running five years. Creditors holding 75% by value of the debt must vote in favour; if they do, every included creditor is bound, even those who voted against. Whatever remains at the end is written off. Homeowners are usually expected to try to release equity in year four or five, or the term is extended by 12 months instead.
DRO (debt relief order) — a 12-month moratorium, after which qualifying debts are written off completely. Qualifying debts must be £50,000 or less, assets no more than £2,000 (a car worth up to £4,000 that you need for work is ignored), and surplus income £75 a month or less — and you must not own your home. There is no application fee since April 2024, and you can only apply through an approved intermediary at a debt advice charity.

An IVA and a DRO are formal insolvency: both appear on the public Individual Insolvency Register and stay on your credit file for six years. A DMP is on no register, but the defaults your creditors register last six years too.

Choosing between them

None of the three covers priority debts — rent, mortgage, council tax, energy, court fines, child maintenance — which have to be dealt with separately first. Our which debt solution wizard narrows the field, and a free adviser at StepChange (0800 138 1111) or National Debtline (0808 808 4000) can confirm the choice. Ignore anything you read about the Statutory Debt Repayment Plan: it is still not in force, no start date has been set, and you cannot apply for it. And never pay a commercial firm a monthly fee to run a DMP — StepChange, PayPlan and Citizens Advice do the same job free.

Read the full guide: Debt Management Plans (DMPs)Covers eligibility, the process, deadlines, and next steps in depth.

Related guides

Debt Management Plans (DMPs)

A debt management plan (DMP) is an informal agreement between you and your creditors, arranged through a debt advice organisation, to repay your unsecured debts at a rate you can realistically afford. Unlike formal insolvency options such as bankruptcy or an IVA, a DMP is not legally binding and does not involve the courts. Used correctly — and always through a free provider — a DMP can give you a structured path out of debt without the legal consequences of formal insolvency.

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Individual Voluntary Arrangements (IVAs)

An Individual Voluntary Arrangement (IVA) is a formal insolvency process that lets you reach a legally binding agreement with your creditors to pay back what you can afford over a fixed period — typically five years. At the end of the arrangement, any remaining debt covered by the IVA is written off.

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Debt Relief Orders

A Debt Relief Order (DRO) is a formal insolvency solution for people with relatively low levels of debt, minimal assets, and very low surplus income. When a DRO is granted, you enter a 12-month moratorium during which creditors cannot take action against you and interest is frozen. At the end of the 12 months, your qualifying debts are written off completely. A DRO can be a powerful fresh start — but it comes with conditions and restrictions.

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