IVA or DRO

When you come to us for debt help, we’ll look at all your options and let you know which solutions are available to you. In the case that you’ve been presented with the option of an IVA (Individual Voluntary Arrangement) or a DRO (Debt Relief Order), we’ll always recommend the solution we feel is the best for you based on your circumstances.

Ultimately, it’s up to you which option you decide you want to go ahead with.

To help you, we’ve put together some information about the differences between IVAs and DROs:

What’s an IVA?

• An IVA lasts for five or six years, depending on whether you own a property with equity, after which time all of the debts included are written off
• IVAs help people who can afford repayments to clear their debts quicker
• You need to make one affordable monthly payment throughout your IVA, which includes the IVA fees
• Your assets are usually protected in an IVA, which means you won’t need to sell your home or car, whatever their value
• You can take on new credit, but it must be necessary – such as a re-mortgage or a hire purchase renewal – and your Insolvency Practitioner must approve it
• Interest and charges will be frozen on all of the debts included in an IVA
• Creditors won’t be able to pursue legal action against you or request payments when you’re in an IVA
• Details of your IVA will be added to the public Insolvency Register for the duration of your IVA, plus three months after completion
• Some IVAs will need to be registered with the court
• It’s possible to add missed debts to your IVA at a later date
• An IVA will stay on your credit file for six years from the date it was approved (or until it’s finished, should it go on for longer than six years)
• With an IVA, you can continue running your business as usual while making repayments.

What’s a DRO?

• A DRO lasts for a year, after which time all of the debts included are written off
• They tend to be for people with low incomes who can’t afford to repay their debts
• There is no longer a fee to apply for a DRO
• You’re not required to make any payments once in a DRO
• You’re allowed assets with a value of up to £2,000 in a DRO
• You’re restricted from taking on more than £500 in credit without disclosing to the lender that you’re in a DRO
• Interest and charges will be frozen on all of the debts included in a DRO
• Creditors won’t be able to pursue legal action against you or request payments when you’re in a DRO
• Details of your DRO will be added to the public Insolvency Register for the duration of your DRO, plus three months after completion
• A DRO doesn’t require court approval to go ahead
• You must include all of the debts you owe on your DRO application – if you miss any, they can’t be added later, and you must continue paying them once your DRO has completed
• A DRO will stay on your credit file for six years from the date it’s approved
• If you’ve taken on a DRO, you’re unable to act as a Company Director without permission from a court, and there are certain public offices you’ll be restricted from holding. However, if your business isn’t a Limited Company, you may still be able to continue trading

Debt solution eligibility

When we consider your debt solution options, we always consider your eligibility for each.

Am I eligible for a DRO?

There are strict criteria to meet to be eligible for a DRO:

• You can’t have had a DRO in the last six years
• You must prove you’re unable to pay your debts, and you must have £75 or less spare income each month after all your essential costs have gone out (£50 in Northern Ireland)
• You must have debts of £30k or less (£20k or less in Northern Ireland)
• You can’t have any assets (including vehicles) worth over £2k (£1k in Northern Ireland)
• You must have lived in England, Wales or Northern Ireland in the last three years

Am I eligible for an IVA?

• You must owe at least £7k to at least 2 creditors
• You must be able to pay at least £50 a month back to your debts
• You must live – or have a business registered in – England, Wales or Northern Ireland

Get debt help today

If you’re struggling with debt and want our support, we’re here and ready to help:

• Call us free on 0800 316 1833
• Complete our online form and see what debt solutions are available to you
• Speak to us over Live Chat