Should I Get an IVA or a DRO? - Read This Before You Decide

STOP — Read This Before You Sign Anything

If you’re overwhelmed and/or struggling with credit cards or other consumer debt and searching for solutions, you may have come across adverts for Individual Voluntary Arrangements (IVAs) or Debt Relief Orders (DROs). These are often promoted as ways to “write off” most of what you owe as a quick fix.

Why You Should Think Twice

An IVA is a legally binding agreement to repay your creditors over a fixed period, often 5–6 years or longer. A DRO is a formal insolvency option for people with low assets and low income.

On the surface, both can sound appealing: one monthly payment, and the idea that your debt will eventually “go away.” But here’s what you need to know:

 • They often do not remove your debt quickly — many agreements last years    

    before completion.

 • Your debt stays on your credit file for at least 6 years from the start date, sometimes 

    longer if the agreement fails.

 • A significant portion of what you pay may go toward fees charged by the insolvency  

   practitioner or intermediary, rather than directly reducing your balance — in some 

   cases, this can be as little as a small single-digit percentage of each payment going 

   to creditors.

 • If your IVA fails, you could be back to square one, still owing money, but now with a 

    damaged credit history and fewer options.

But here’s the truth:

For most people, IVAs and DROs are NOT the best solution.

They can leave you in a worse financial position, even years later.

The Industry Doesn’t Tell You This…

A huge number of IVA providers are not debt charities. They earn money only when you enter an IVA, so guess what they recommend?

The marketing for IVA's and DRO's often only highlights the positives, but for the majority of people, these solutions are either unsuitable, unsustainable, or unnecessarily expensive compared to alternatives. For many, informal arrangements, debt management plans, or direct negotiation with creditors can be more flexible, less risky, and often free of large fees.

IVA's are often sold to people who should never have been put into them. That’s why thousands of IVAs fail.

Also, DO NOT sign up for a Debt Consolidation loan, while it may reduce monthly payments and a lower rate of interest, it will typically cost you more in the long term.

You deserve advice that puts YOU first and not company commission.

Before you sign up, it’s important to understand the disadvantages of IVAs and the downsides of DROs. For most people, there are better IVA alternatives that can clear debt faster, cost less, and protect your credit rating.

The Disadvantages of IVAs

If you’ve asked yourself “Should I get an IVA?” — here are the main drawbacks:

 • Long Commitment – Most IVAs last 5 to 6 years or longer.

 • Credit Damage – An IVA stays on your credit file during the arrangement and for 12   

   months after completion.

 • High Fees – A large percentage of your monthly payment goes to insolvency 

   practitioner fees, not directly to creditors. In some cases, as little as 1% of your 

   payment reaches them.

 • Risk of Failure – If your IVA fails, your debts remain, and you may be forced 

    into bankruptcy.

DRO Disadvantages You Need to Know

A Debt Relief Order is another type of insolvency, but it comes with strict rules and long-term consequences:

 • Asset Restrictions – You won’t qualify if you own a property or assets above a 

   certain value.

 • Credit Impact – DROs remain on your credit file for six years.

 • Debt Limit – Only available if your total debt is below £30,000 (England and Wales).

 • No Credit Rebuild – While a DRO may pause your debt, it doesn’t help you improve 

   your credit rating.

IVA Alternatives Worth Considering

Before committing to an IVA or DRO, consider these IVA alternatives:

 • Debt Management Plans (DMPs) – Informal arrangements without the same 

    legal restrictions.

 • Full & Final Settlements – Agreeing with creditors to accept less than the full balance.

 • Budget Adjustments & Negotiation – Restructuring your finances and negotiating 

   directly can sometimes avoid insolvency altogether.

Comparison Table of IVA vs DRO vs Alternatives

Feature                   IVA                        DRO                      IVA & DRO Alternatives

                                                                                                               (e.g., DMP / Negotiation)

Formal 

Insolvency?             Yes                          Yes                           No

Typical Duration  5–6+ years                12 months              Varies — flexible

Credit Damage  Severe (6+ years) Severe (6 years)      Moderate to minimal

Eligibility Limits  Must meet criteria Low income +         Flexible

                                                                        low assets + 

                                                                        strict debt cap

Fees                  High — taken              Low                       Typically low/none

                                  from payments

Creditor

Payments         Often low %                 None during DRO       Yes

Risk of Failure Medium–High         Low                       Low

If It Fails                 Debt remains,               Debt remains      Still negotiable

                                 fewer options        

Flexibility         Very low                  Very low               High

Assets at Risk Possible                  Limited                       No

Public Record Yes                                  Yes                       No

Best For                  Last resort                  Last resort               Most people

For most people, IVA and DRO alternatives offer more flexibility, lower risk, and less long-term damage.

The Bottom Line — Why IVAs and DROs Aren’t Always the Best Choice

IVA's and DRO's are LAST-RESORT options, They are NOT quick fixes, or easy write-offs.

They come with:

➡ Years of impact

➡ Long-term financial damage

➡ Risk of failure

➡ High fees

There are better IVA alternatives for many people,  options you may never have been told about.

Best debt solution?

The best solution depends on your situation, but IVA's and DRO's should be last resort options. Many people benefit from more flexible alternatives.

Legal notice:

IVAs and DROs are formal insolvency arrangements that will affect your credit rating and may put assets at risk. They are not suitable for everyone. Many arrangements take several years to complete and only a proportion of your payments may be passed to creditors after fees. If the arrangement fails, your debt will remain. Always seek free, impartial, FCA-regulated debt advice before proceeding.