Tackling your debts

What are the alternatives to a DRO? Part one

Posted 02 November 2015

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DROs are just one option for getting out of serious debt. Have a look through the alternatives, in case there’s a better one for you.

If you’ve found out that a Debt Relief Order won’t work for you for one reason or another, don’t worry, there are other options available.

Let’s just go over the criteria for a DRO in brief. To qualify for a Debt Relief Order you must owe less than £20,000 in unsecured debts, have less than £1,000 in assets (not including your car which can be worth £1,000) and also have less than £50 in disposable income every month.

Now let’s have a look at the other solutions you may not be aware of. After you’ve had a read you should look into the solutions in more detail before you make any decisions and if you want to discuss any of them then our debt advisors are only a phone call away.


Bankruptcy can seem scary, but it’s so important that you don’t discount what could be the right solution for you before learning the facts. Like any debt solution it has its pros and cons. Let’s have a look at some of them.

It costs £705 to go bankrupt and you need to owe at least £750 to your lenders. You’d be expected to put something towards your debts each month, but only what you can realistically afford. It would be the Official Receiver (the person who oversees your bankruptcy) who decides what you pay, not your creditors. The typical bankruptcy ends after twelve months and at that point your debts are written off, so you would get to look forward to a date when you would be debt free.

Of course it does have serious consequences as well. If you enter into bankruptcy then you are expected to pay as much as possible towards your debts, so your assets are assessed carefully. If you’ve got enough equity in your home, you may be expected to sell and put the money into the bankruptcy. Similarly, if you had a car worth over £1,000 then you might have to sell and get a cheaper one.

There are also restrictions as to what kinds of jobs you can do. You wouldn’t be allowed to do a job where you are advising people about their own personal finances for example, or act as a company director. Have a look at our page just on bankruptcies for more info.

Individual Voluntary Arrangements (IVA)

With an IVA you’d pay a monthly amount towards your debts and it would normally last for five years. Your insolvency practitioner would take a good look at what you’ve got coming in and going out and make sure that your payments are affordable. At the end of the agreement, as long as you’ve held up your end, the remaining unsecured debts included on the IVA would be written off.

Unlike bankruptcy, a certain percentage of your creditors (based on what you owe) have to agree to the arrangement before it goes ahead.

An IVA is a form of insolvency, like bankruptcy, and could be right if you think you can repay some of what you owe, but not everything. For more info on IVAs click here.

That's enough for one day. Tomorrow we'll carry on with the alternatives to a DRO and look at whether a Debt Management Plan or debt consolidation could be rght for you. 

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.