Debt consolidation loans and IVAs can both do this, but they're very different debt solutions, suitable for people in very different situations. Neither is better or worse than the other – it's a question of which is more suitable for the individual in debt.

So, first of all, there's the issue of eligibility. As a formal debt solution and a form of insolvency, IVAs are only available to people who genuinely can't keep up with their repayments to their unsecured debts.

Debt consolidation loans are, in theory, available to anyone – everyone has the right to take out a new loan that's large enough to pay off their other unsecured debts.

Second, there's the total debt to consider. IVAs are normally only suitable for people who owe at least £15,000, although this figure isn't set in stone.

There's no minimum amount that makes someone eligible for a debt consolidation loan – if they think it'll improve their financial situation, they're free to consolidate their debts if they want to, as long as they can find a loan.

Third, there's the impact on the individual's credit rating. By simplifying their finances and reducing their monthly debt repayments, a debt consolidation can help them avoid late / non-payments, which should help them keep their credit rating from suffering.

An IVA, on the other hand, is a form of insolvency – it's not regarded as being as serious as bankruptcy, but it will have a serious impact on someone's credit rating, and probably make credit harder to obtain and more expensive. It'll stay on their credit report for six years, although this won't really be an issue for the first five of those years (the normal length of an IVA), as people aren't normally allowed to borrow money while their IVA is in progress.

Fourth, there's the potential impact on the borrower's home (if they're a homeowner). Many people choose to consolidate their debts with a secured loan, securing their new loan against their house. This should get them a better rate of interest than they'd get with an unsecured debt consolidation loan, but they're potentially putting their home at risk – if they don't keep up their monthly payments, the lender could repossess their home (although lenders do see this as a last resort and will try to find another solution to the problem).

IVAs can protect a borrower's home. Unlike bankruptcy, an IVA is very unlikely to require the homeowner to sell their home, although they are likely to have to free up some of the equity in their home towards the end of the IVA, so they can pay off more of their debt.

Fifth, there's the question of writing off debt. With an IVA, the individual basically agrees to pay off as much of the debt as they realistically can over the next five years. They commit to making regular, fixed payments – the maximum they can afford once they've taken their essential monthly expenses into account. In return, the creditors agree to write off any outstanding debt at the end of that period – as long as the borrower has kept up with their payments.

With a debt consolidation loan, there's no question of writing off any debt. The individual is simply borrowing enough from a new lender to pay off their ‘old' lenders, so there's no reason anyone should agree to write off anything!