An IVA may not be suitable in all circumstances.

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An IVA (Individual Voluntary Arrangement) and DMP (Debt Management Plan) are two very different debt solutions. To decide which one is best for you, here are nine things to consider.


By reading this article, you’ve already taken the first step to finding help with repaying your debts. Sometimes the first step is the hardest step to take, but there are many others who are in IVAs and DMPs. We’ve helped 28,115* customers with IVAs so far. So, should you choose IVA or DMP?

* As of 31/12/23 28,115 of our customers were in an active IVA.

What do IVA and DMP stand for?

An IVA stands for ‘Individual Voluntary Arrangement’ while DMP is an abbreviation of ‘Debt Management Plan’. Both of those solutions are designed to deal with your debts but they go about it in very different ways.

How is an IVA different to a debt management plan?

The two main differences between an IVA and a DMP:

  • An IVA is legally binding – once approved, both you and your creditors must stick to it;
  • A Debt Management Plan is an informal agreement – lenders may not stick to it

The main difference when it comes to these solutions is that an IVA is a legally binding arrangement. This means, once approved, all parties including your creditors must abide by the terms and conditions. A Debt Management Plan, on the other hand, is not. This means that although it may be more flexible to alter the repayments on the plan, it’s a less formal agreement which lenders can back out of at any time.

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The differences between an IVA and a DMP

Here are the differences between an IVA and a DMP:

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Protection from creditors

With an IVA, you’re protected from your creditors. This isn’t true with a DMP, though, and you could still face legal action from these organisations.

A frozen symbol to illustrate frozen interest charges

Freezes interest rates and charges

Interest rates and charges are frozen with an IVA. Although many creditors will usually agree to this, it is not guaranteed with a DMP.

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Length of policy

IVAs generally last between five and six years. A DMP will last until the debt is paid off in full.

A pen and money bag to illustrate the debt write-off concept

Debt write-off

Once the IVA ends, any remaining unsecured debts are written off. With a DMP, no amount is written off.

Phone ringing symbol illustrating contact with creditors

Contact with creditors

With an IVA, direct contact with your creditors regarding repayment of the debts should stop. This means no more demands for repayment, although creditors are still obliged to send you annual statements. With a DMP though, lenders can still chase you.

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Asset protection

Your assets are protected during an IVA. However, you may be required to release equity from your property if you are a homeowner. A DMP does not protect your assets.

A document to show who manages a plan with an IVA or DMP

Who manages the plan?

You can manage a DMP yourself or run it through a third party. With an IVA, this is administered through a qualified licensed Insolvency Practitioner.

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Who knows about this?

IVAs are entered onto a public database called the Insolvency Register which is searchable by anyone. A DMP is kept private.

IVA or DMP set up fees represented by stacks of coins

Setup fees

An IVA is generally more expensive to set up than a Debt Management Plan, however the fees in an IVA, once agreed by creditors, are taken from the amount which is paid into the arrangement and are not additional for you to pay outside of your monthly payment.

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Is a DMP better than an IVA?

Whether or not a DMP is ‘better’ than an IVA depends on your viewpoint and financial circumstances. There are certain situations where one might be more suitable than the other though:

An IVA might be more suitable if:

  • Your creditors are in regular contact with demands for repayment.
  • The value of your unsecured debts exceeds £6,000.
  • You do not think it’s possible to repay your creditors in a reasonable time.
  • You have a reliable source of income for the IVA repayments.
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A DMP might be more suitable if:

  • The value of your debts is under £6,000.
  • You feel, ultimately, you can repay your creditors through a reduced payment.
  • You have a reliable source of income which can be used to repay your lenders.