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Alternatives to bankruptcy - crossroads showing different debt solution paths in 2026

Alternatives to Bankruptcy: Your Options Explained for 2026

If you are struggling with debt, bankruptcy might feel like the only way out. But there are several alternatives to bankruptcy that could help you get back on track without the same long-term impact on your finances and credit rating. Each option works differently depending on how much you owe, your income, and whether you own property.

This guide covers the main alternatives to bankruptcy available in England and Wales in 2026, including Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DROs), Debt Management Plans (DMPs), and County Court Administration Orders (CCAOs).

Please note: this page provides general information only and does not constitute financial advice. If you are unsure which option suits your circumstances, seek guidance from a qualified debt adviser or contact a free service such as StepChange or MoneyHelper.

Why Consider Alternatives to Bankruptcy?

Bankruptcy is a formal insolvency process that writes off most of your debts, but it comes with serious consequences. The bankruptcy fee is currently £680, paid to the Adjudicator’s Office when you apply online. Your name appears on the Individual Insolvency Register for the duration, and the record stays on your credit file for six years. If you own a home, your property may be at risk. Certain professions, such as solicitors, accountants, and company directors, are restricted during bankruptcy.

Depending on your situation, one of the alternatives below could offer a way to deal with your debts while keeping more control over your assets and financial future.

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement is a legally binding agreement between you and your creditors to repay a portion of your debt over a fixed period, typically five to six years. An insolvency practitioner sets it up on your behalf and manages the process.

How an IVA Works

You make regular monthly payments based on what you can afford. At the end of the arrangement, any remaining debt included in the IVA is written off. Creditors holding 75% or more of the total debt value must agree to the proposal for it to go ahead. Once approved, all creditors are bound by the terms, even those who voted against it.

Who Qualifies for an IVA?

  • You typically need debts of £6,000 or more (though some providers accept lower amounts)
  • You need a regular income to make monthly payments
  • You usually need two or more creditors

Pros and Cons

On the positive side, an IVA protects your home (though you may need to release equity in the final year), stops creditor action once approved, and writes off remaining debt at the end. On the downside, it lasts five to six years, affects your credit rating for six years from the start date, and failing to keep up payments could lead to bankruptcy. An IVA is recorded on the Individual Insolvency Register.

Debt Relief Order (DRO)

A Debt Relief Order is designed for people with relatively low debts, few assets, and little spare income. It is often described as a lighter form of bankruptcy and is administered by the Insolvency Service.

DRO Eligibility Criteria (2026)

To qualify for a DRO, you must meet all of the following conditions:

  • Total qualifying debts of £50,000 or less
  • Assets worth no more than £2,000 (excluding a vehicle worth up to £4,000)
  • Spare income (disposable income) of no more than £75 per month
  • You have not had a DRO in the last six years
  • You are not currently subject to another insolvency procedure

The DRO application fee is £90. You apply through an approved intermediary, which is typically a debt adviser at a free advice agency such as Citizens Advice.

What Happens During a DRO?

Once granted, a 12-month moratorium period begins during which creditors cannot chase you for payment. If your circumstances have not significantly improved by the end of the 12 months, your debts are written off. If your situation changes (for example, you receive an inheritance or your income increases substantially), the DRO may be revoked.

Debt Management Plan (DMP)

A Debt Management Plan is an informal agreement between you and your creditors to repay your debts at a reduced rate you can afford. Unlike an IVA or bankruptcy, a DMP is not legally binding.

How a DMP Works

You work out a budget with a DMP provider, establishing how much you can realistically pay each month. That amount is then split between your creditors. Creditors may agree to freeze interest and charges, though they are not obligated to. Free DMP providers include StepChange and PayPlan.

Who Is a DMP Suitable For?

  • You have some spare income each month to make payments
  • Your debts are manageable with reduced payments over a longer period
  • You want to avoid a formal insolvency process
  • You have non-priority debts such as credit cards, personal loans, or overdrafts

Things to Consider

A DMP can take many years to complete because you are repaying the full amount owed (unless creditors agree to write off part of the balance). Because it is informal, creditors can withdraw from the arrangement at any time and resume collection action. Your credit rating will be affected for the duration. Be cautious of fee-charging DMP providers: free services from charities like StepChange are available and regulated by the Financial Conduct Authority.

County Court Administration Order (CCAO)

A County Court Administration Order is a court-supervised repayment plan available to people with at least one county court judgment (CCJ) against them and total debts of £5,000 or less.

How a CCAO Works

You apply to your local county court, and if the order is granted, you make a single monthly payment to the court. The court then distributes payments to your creditors. A “composition order” may also be made, meaning you only repay a proportion of your debts.

Eligibility

  • You must have at least one CCJ registered against you
  • Your total debts must not exceed £5,000

CCAOs are relatively uncommon compared to the other options on this page, largely because the £5,000 debt threshold is quite low. However, they can be useful if you have multiple small debts and at least one CCJ.

Comparing Your Options: Which Alternative to Bankruptcy Is Right?

Choosing the right alternative to bankruptcy depends on your individual circumstances. Here is a quick comparison:

IVA: best if you have debts over £6,000, a regular income, and want a structured plan that writes off remaining debt after five to six years. Your home is generally protected.

DRO: best if you owe £50,000 or less, have minimal assets, and very little spare income (under £75/month). Low cost at £90 and debts written off after 12 months.

DMP: best if you want to avoid formal insolvency, have some spare income, and prefer an informal arrangement. No upfront cost through free providers, but repayment can take longer.

CCAO: best if you have debts under £5,000 and already have a CCJ against you. Court-managed with the possibility of only repaying part of what you owe.

If none of these alternatives are suitable, bankruptcy itself may still be the most appropriate route. You can read more about the full bankruptcy process in our guides section.

Getting Free Debt Advice

Before committing to any debt solution, it is worth speaking to a free, independent debt adviser. The following organisations offer free advice and can help you work out which option is best for your situation:

You can also use our free bankruptcy alternatives checker to get an initial assessment based on your circumstances.

Next Steps

If you are considering your alternatives to bankruptcy, the most important thing is to act sooner rather than later. Ignoring debts rarely makes them go away, and early action gives you more options. Whether you are leaning towards an IVA, DRO, DMP, or CCAO, getting professional advice tailored to your specific situation will help you make the right choice.

This page provides general information about alternatives to bankruptcy in England and Wales. It does not constitute financial or legal advice. Legislation and thresholds are correct as of March 2026 but may change. Always consult a qualified adviser before making decisions about your debt.

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Use our free tool to find out which alternatives to bankruptcy may be available to you. It takes just a few minutes and there is no obligation.

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