IVA or Debt Management Plans – What’s the Best Option for You?

If you have a lot of debt then it can seem if there is no way out. However, there are always options available to you. Two of the most popular options for people that owe money but own a property are a DMP (debt management plan) or an IVA (Individual Voluntary Arrangement). There are clear differences between the two plans and the one that will be best for you will largely depend on your own circumstances. The advantages and disadvantages of both types of plan are listed in more detail below.


An IVA is a legal agreement between you and your creditors where you only pay back the what you can afford. At the end of the term any money that you still owe will be written off.


  • All of the interest will be frozen and no further charges are added so the amount that you owe will not increase.
  • At the end of the term any IVA Debt that you owe will be written off.
  • Creditors are not allowed to contact you once you have entered into the IVA.


  • If you are unable to stick to the IVA then your creditors can petition for your bankruptcy.
  • It can be difficult to changes the terms of the IVA if you have a change in circumstances.
  • There is a fee involved in setting up an IVA but this can be worked into your monthly payment.


A DMP is an informal agreement where you will pay reduced payments to your creditors until all the money that you owe is repaid.


  • It is fairly flexible although any changes will need to be agreed to by your creditors. If your income changes then you would be able to increase or reduce your payments.
  • There is no eligibility criteria for a DMP so anyone can set one up.
  • If you use a company that does not charge for administering a DMP then there are no costs involved to set one up.


  • The DMP could keep going for many years if you have a lot of money which means that you will it could be a substantial amount of time before you are debt free.
  • The amount of debt could increase in the short term because creditors do not have to stop charging interest. They usually will eventually but this may take some time.
  • Although it is unlikely, there is nothing to stop creditors taking legal action against you even if you having been paying them through a DMP for some amount of time.

It can be a good idea to get some advice from a professional before you undertake either of these options. There are plenty of sources of advice online and in person that will not cost you anything to access. Being in debt can feel like a very lonely place but it does not have to be this way and there is a lot of help out there for you. If you have been worrying about money for some time then it can be a huge relief when you start to take action to improve your financial situation.

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