Dealing with debt can feel like navigating a complex maze with no clear exit. In the UK, two paths often considered by individuals struggling with debt are Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs). Both offer legal ways to manage and potentially clear your debt, but they come with different criteria, processes, and impacts on your financial future. This comprehensive guide aims to demystify DROs and IVAs, helping you make an informed decision on which route might be best for your situation.

Introduction to Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs)

When debt becomes overwhelming, it’s crucial to know that there are options available to help you regain control of your finances. In the UK, DROs and IVAs are two such options, each designed to offer relief to those struggling under the weight of debt. But how do you know which one is right for you? Here, we’ll explore the ins and outs of DROs and IVAs, including their benefits, limitations, and the process for each, to give you a clearer understanding of your options.

Contend: Your Partner in Understanding Legal Debt Solutions

At Contend, we leverage cutting-edge AI technology to provide clear, reliable legal guidance on dealing with debt. Our AI legal experts are here to help you understand your options, including DROs and IVAs, and guide you toward making the best decision for your financial health.

For help with questions related to your issue, you can chat with one of Contend’s legal experts, and get immediate answers to your legal questions.

What is a Debt Relief Order (DRO)?

A DRO is a form of debt management available in the UK that is designed for individuals with a low level of debt, few assets, and little disposable income. It acts as a temporary pause on your debt repayments and creditor actions for a period of 12 months. During this time, creditors cannot pursue legal action to recover debts included in the DRO. If your financial situation does not improve by the end of this period, the debts included in the DRO may be written off.

Eligibility Criteria for a DRO

To qualify for a DRO, you must meet certain criteria, including:

  • You owe £20,000 or less.
  • You have £50 or less in disposable income each month.
  • You have assets worth £1,000 or less, excluding essential household items and a vehicle worth £2,000 or less.
  • You must have lived or worked in England, Wales, or Northern Ireland within the last three years.
Money and Debt: dro vs iva

What is an Individual Voluntary Arrangement (IVA)?

An IVA is a legally binding agreement between you and your creditors to pay off your debts over a set period, usually five years. It allows you to make manageable monthly payments towards your total debt, and at the end of the term, any remaining debt is written off. IVAs must be set up and managed by a qualified professional called an insolvency practitioner (IP).

Benefits and Limitations of an IVA


  • Stops creditors from taking legal action against you.
  • Allows you to make a single, affordable monthly payment.
  • Remaining debt is written off at the end of the term.


  • Your credit rating will be negatively affected for six years.
  • You may need to release equity from your home if you own one.
  • Not all debts can be included in an IVA.

DRO vs IVA: How to Choose

Choosing between a DRO and an IVA depends on your specific financial situation, including the amount of debt you owe, your income, and your assets. Here are some factors to consider:

  • Debt Level: DROs are suitable for lower levels of debt (£20,000 or less), while IVAs can accommodate higher debt levels.
  • Assets: If you own significant assets, an IVA may be more appropriate, as DROs are designed for individuals with minimal assets.
  • Disposable Income: DROs require you to have £50 or less in disposable income each month, whereas IVAs are flexible and based on what you can reasonably afford to pay.

Taking Action: How Contend Can Help

Understanding your options is the first step toward managing and overcoming debt. At Contend, our AI-driven legal guidance can help you navigate the complexities of DROs, IVAs, and other debt solutions. By chatting with our AI legal assistant, you can get personalized advice tailored to your unique situation, all within minutes and without the legal jargon.

Conclusion: Empowering Your Financial Freedom

Debt doesn’t have to be a life sentence. With the right information and support, you can find a path out of debt that works for you. Whether it’s through a DRO, an IVA, or another solution, it’s important to take action and seek guidance. Remember, Contend is here to help you understand your options and take the first steps toward regaining your financial freedom.

Ready to Take Control of Your Debt?

Chat now with Contend’s legal expert and discover how we can help you navigate your debt relief options with confidence. Let us guide you toward a brighter financial future, starting today.

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