What are the alternatives to an Individual Voluntary Arrangement?

An IVA isn’t the only debt solution available to you. There are other solutions available that might be better for you, depending on your circumstances. We’ve listed them below, but speaking to a debt advisor is the best way to find out which one is the most suitable solution for you.


Bankruptcy may be a suitable solution if you can’t afford to repay your unsecured debts in a reasonable amount of time. It takes less time to complete than an IVA does, but you could lose your home and other assets, and you will need to pass over control of your finances to the Official Receiver.

Once you are declared bankrupt, you will only have to make payments towards your debts if your Trustee decides you can afford to. If you do have to make payments towards your debts, you will start something called an Income Payment Agreement (IPA). Your payments will be affordable and take into account your essential living costs, such as rent, mortgage, utilities, food and travel expenses. Your IPA normally continues for up to three years. In most circumstances, you’ll be discharged from bankruptcy after 12 months and whatever you can’t afford to repay will be written off. If your income was made up solely of state benefits then you wouldn’t be expected to pay anything into the bankruptcy.

You should think carefully about entering into bankruptcy, though, and be aware it’s usually considered a final option if no other debt solution has worked or is suitable. As we mentioned, when you’re declared bankrupt some of your assets may be sold to repay your debts. If you’re a homeowner, this could include your property.

As with other debt solutions, it’ll be visible on your credit history for six years. This will have a knock-on effect on your ability to obtain credit during this time, and potentially beyond this period too. This is because, when you make new applications for credit, you may be asked if you’ve ever been bankrupt and your answer could result in your application being turned down. Your details will also be recorded on the Insolvency Register while your bankruptcy is ongoing and for three months after you’ve been discharged from bankruptcy.

It costs £680 to apply for bankruptcy, which is split between the Official Receiver's fee of £550 and an administration fee of £130. To learn more, have a look at our dedicated page on bankruptcy. 

Debt Relief Order

If you realistically can’t repay your unsecured debts in a reasonable amount of time, a Debt Relief Order (DRO) could provide you with a lower-cost alternative to deal with your debts, compared to bankruptcy. If you live in England, Wales or Northern Ireland and meet the strict eligibility criteria, it could be a suitable solution for you. To qualify, you need to have a limited level of disposable income after covering all of your essential living costs, which include things like your rent, food, utility bills and travel costs. To qualify for a DRO, you'd also have to show that you don't have assets that could be used to pay off your debts. 

Once your DRO has been agreed, any payments towards your unsecured debts will be suspended for 12 months. If your circumstances don’t improve during that period, the outstanding debts that are included in your DRO will be written off.

A DRO is an insolvency solution and as such, it comes with consequences. Your credit history will be negatively affected for at least six years from the date you start it, which will make it harder for you to borrow. To qualify for a DRO, your debts would have to be less than £20,000 and you’d need to have no more than £50 disposable income every month. You wouldn’t be allowed to have more than £1,000 in assets, or a car worth more than £1,000.

The fee is £90 to apply for a DRO. If you think that this solution might be right for you, be sure to look into DROs in more detail. 


individual voluntary arrangement
see if an iva could help-you


Debt Management Plan (DMP)

If you’re struggling to make your current monthly payments on your unsecured debts but you can pay something towards them, a Debt Management Plan could be the right way forward. It will allow you to continue paying them, but at a more affordable rate. So, you should still have enough money to cover your essential living costs like your rent, mortgage, food, utility bills and travel expenses.

You, or a debt solution provider, can speak to your creditors and negotiate a single, lower monthly payment that’s sustainable and affordable for you. Your creditors aren’t obliged to accept these lower payments; however, providing they can see that they’re fair to both you and them, they should be willing. In terms of the interest and charges on your debts, you or your solution provider can request that these are frozen. While your creditors are not obliged to do this, in most cases they agree. 

A Debt Management Plan has consequences. For example, as you’ll be reducing your monthly repayments, which is essentially breaking the original agreement you had, a default notice will usually be issued that will show on your credit history. This will make it harder for you to obtain credit in the short to medium term, and possibly in the longer term too.

Learn more about this informal way to deal with your debts with our page on DMPs. 

Debt Consolidation

Debt consolidation could help you repay your debts by combining them into just one regular payment, which could be at a reduced rate and/or over a longer period of time.

You’ll combine your multiple existing debts into one manageable monthly payment, rather than having to make individual payments to each of your lenders each month, and it could reduce the amount you pay each month too.

It’s important to remember that if you choose to pay back what you owe over a longer time period, this may mean you’ll be paying interest for longer and you could therefore end up paying more in the long run.

Scottish Alternatives

If you have unmanageable debts and you live in Scotland, an IVA would not be available.  But there are alternatives that you should look into, such as a Trust Deed. Just like an IVA, a Trust Deed means that you would pay something towards your debts each month, then at the end of the plan the rest of your debts would be written off.

If, after speaking with a debt advisor, you discover that a Trust Deed is the best way forward, the next step is to put a proposal together. This is done by your IP and your creditors would have a chance to look at the proposal and decide whether to accept it or not. A Trust Deed could go ahead as long as half of your creditors, or one-third in terms of the amount that you owe, do not object to the proposal. As long as you don’t exceed the allowed number of objections, the Trust Deed can go ahead and will be legally binding; protecting you from further action being taken.

In terms of the advantages and disadvantages of a Trust Deed, they are very similar to an IVA. For example, you would be able to keep your home but may have to release equity from it, and there would be a negative effect on your credit history. However, there are some differences between the solutions; for example, an IVA usually lasts for five years while a Trust Deed usually lasts for four.

There are other debt solutions available in Scotland, such sequestration, which is the Scottish version of bankruptcy, and Debt Arrangement Schemes. If you live in Scotland and you can't repay your debts, it's important that you look into Trust Deeds and other Scottish solutions that could help.