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).

Below is a handy table to easily compare the two:

Individual Voluntary Arrangement (IVA)

Debt Management Plan (DMP)

IVAs normally last for five years. It is a client’s proposal for an arrangement and voted on by creditors.

DMPs can go on until the debt is paid back in full and, in some instances, include repayment of interest and charges.

A large proportion of debt is written off

In a DMP all debt is repaid. There is no guarantee that interest and charges will be frozen by creditors.

Legal action is normally prevented without specific court consent. Charging orders and CCJs can be difficult for creditors to pursue when an IVA is in place.

As a DMP is an informal debt plan creditors can pursue further legal action.

An IVA is legally binding. Creditors cannot circumvent an IVA with their own demands or changes later down the line.

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 will stop.

Creditors are not obligated to stop contact if you remain in default in a DMP.

Your credit score can be fixed or repaired when the IVA is complete.

In a DMP you may face difficulty with your credit file for the duration of the plan.

Here are some other points to consider:


In an IVA, those with property, either mortgaged or owned outright, will normally be subject to equitable release 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 – whilst the creditors have limited action whilst someone is in an IVA, failure to abide by the terms can result in 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.

If you’re facing debts you can no longer manage, contact us today.


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