Debt Solutions Explained: Your Options for Getting Out of Debt

If you are struggling with debt, there are several solutions available to help you manage, reduce, or clear what you owe. The right option will depend on how much you owe, your income, and the assets you hold.

This guide explains the main UK debt solutions:

• Breathing Space (Debt Respite Scheme)
• Debt Management Plans (DMP)
• Administration Orders (AO)
• Individual Voluntary Arrangements (IVA)
• Debt Relief Orders (DRO)

Breathing Space (Debt Respite Scheme)

In England and Wales, you can apply for the Breathing Space Scheme, which gives you temporary protection from your creditors while you seek debt advice.

• You could get up to 60 days of protection where most interest, charges and enforcement actions are paused.
• You must continue paying your debts during this time.
• You cannot apply if you already have a DRO, IVA, interim order or are an undischarged bankrupt.

Read more: Breathing Space – Debt Respite Scheme

Debt Management Plan (DMP)

A Debt Management Plan helps you repay unsecured debts by making reduced monthly payments that are more affordable.

• Covers non-priority debts such as credit cards, overdrafts and personal loans.
• A DMP provider will work with your creditors on your behalf.
• Payments are based on what you can reasonably afford.

Read more: Guide to Debt Management Plans

Administration Order (AO)

An Administration Order is for people with a County Court or High Court judgement they can’t afford to pay in full.

• You make one monthly payment to the court, who then distributes it to your creditors.
• Total debts must be £5,000 or less.
• The order lasts until all debts and the court fees are cleared.

Read more: Administration Order

Individual Voluntary Arrangement (IVA)

An IVA is a formal agreement with creditors to pay back part of your debt over time.

• Starts if creditors holding 75% of your debt agree.
• Usually lasts five to six years with affordable monthly payments.
• At the end, any remaining unsecured debt is written off.

Read more: Individual Voluntary Arrangement

Debt Relief Order (DRO)

A Debt Relief Order can help if you have a low income, few assets and modest debts.

• Debt repayments and interest are frozen for 12 months.
• If your finances haven’t improved at the end of that period, the included debts are written off.
• To qualify, you must owe under £30,000, not own a home, and have limited disposable income.

Read more: Debt Relief Order

Summary

Your main debt solutions in the UK include:

• Debt Management Plan – informal repayment plan for unsecured debts.
• Administration Order – for debts under £5,000 with a court judgment.
• IVA – formal repayment plan usually lasting 5–6 years, with some debt written off.
• DRO – for debts under £30,000 with limited income and no assets.

Managing Debt While Leasing a Car

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At Compass Vehicle Services, we specialise in supporting people with debt challenges and bad credit histories, helping you get back on the road while managing your finances responsibly.

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