What is the difference between an IVA and a DMP?

If you are facing debts and are unsure which is the best option to take, we’ve put together a rundown of the important differences between two of the most popular options of tackling unsecured debts;  Individual Voluntary Arrangements (IVAs) and a Debt Management Plans(DMPs).

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Below is a handy table to easily compare the two:

Individual Voluntary Arrangement (IVA) Debt Management Plan (DMP)
IVAs normally last for five years. DMPs will continue until the debt is paid back in full including repayment of interest and charges.
A large proportion of debt is written off at the end of the IVA. In a DMP all debt is repaid. There is no guarantee that interest and charges will be frozen by creditors.
Once the IVA has been approved, all unsecured creditors bound by the IVA are unable to take further legal action. As a DMP is an informal debt plan so creditors can pursue further legal action.
An IVA is legally binding so creditors cannot make any changes to your agreement once it has been approved. They can ask for modifications to your proposal but once accepted, the agreement is binding. A DMP is informal and creditors can dictate changes throughout the course of a plan.
With the exception of statements and legally obligated letters (changes in contact information or another party may deal with the debt payment) contact with your creditors will stop during your IVA. You should allow approximately 3 months after the approval of your IVA to allow creditor administration departments to update their system details. Creditors can at any point contact you throughout a DMP. They can also take legal action against you.
Your IVA will stay on your credit file for six years from the date it was approved or until it is finished should it go on for longer than six years. In a DMP you may face difficulty with your credit file for the duration of the plan. A default notice can be issued at any point during your DMP and will stay on your file for 6 years from the date the last default is issued.

Here are some other points to consider:


In an IVA, those with property, either mortgaged or owned outright, will be subject to an equitable clause as part of asset realisation to creditors. This will increase the return (referred to as a ‘dividend’) to your creditors. A large proportion of debt will still be written off.

If you are unsure contact us using PayPlan’s enquiry form or call us for more information.

IVAs are legally binding so your creditors cannot take legal action during your IVA. If you miss payments however or fail in your IVA, your creditors may make a request for your bankruptcy.

An IVA should not be taken lightly and requires co-operation with the Supervisor.


A DMP is a less formal debt plan and is not legally binding, there is no obligation for creditors to freeze interest rates and charges or stop default action and Payplan will do all that we can but cannot provide a guarantee creditors will freeze or reduce interest and charges. The advantage of a DMP is that it can offer more room for flexibility. A change in circumstances might impact the sustainability of an IVA but a DMP can remain open during difficult times.

DMP’s are not a form of Insolvency and so avoid formal insolvency proceedings that you would be subject to in bankruptcy or an IVA, however, a DMP does leave you open to possible legal action by creditors.

There is no obligation to release equitable interest in a DMP and no specific obligation to release other assets to your creditors.


So what’s the best option to take? The simple answer is that there is no definitive hard and fast rule.

One person suitable for a DMP may not be suitable for an IVA. There are several factors and criteria for both and your personal circumstances and preferences effect what is best for you.

Struggling with what to do? Don’t delay any further. PayPlan staff are fully trained to help you in explaining the available options and will recommend the best solution for you. If you’re facing debts you can no longer manage, contact us today.

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