IVA or debt management plan?

Legal status and creditors

An IVA is a formal agreement. If creditors holding 75% of the debt agree, GOV.UK says it applies to all creditors, including those who objected. Creditors are prevented from taking action on the debts it covers.

A debt management plan (DMP) is a private arrangement. A company, or you, asks creditors to accept it, and they can say no. Unless the agreement says otherwise, creditors can still ask for the full balance later. A DMP can only include unsecured debts, which are debts not backed by your property.

Interest, charges and fees

With an IVA, the key facts say interest and charges are frozen while it runs, but can come back if the IVA is cancelled. Fees are built into your monthly payments.

GOV.UK's DMP page does not say whether interest stops. Ask each creditor and check any written terms. Some DMP companies charge a setup fee and a fee on each payment, and you can arrange a plan yourself.

Length and who arranges it

An IVA usually lasts 5 years, or 6 years if home equity is £10,000 or more. Only a licensed insolvency practitioner can arrange one.

GOV.UK describes a DMP as repaying your debts over time and gives no fixed term. A DMP can be cancelled if you miss repayments.

Credit file and register

An IVA appears on your credit file for 6 years from the date it starts. It is listed on the public Individual Insolvency Register and removed 3 months after it ends.

GOV.UK's DMP page does not say how a DMP shows on a credit file, so ask your provider and the credit reference agencies. The Individual Insolvency Register covers bankruptcies, Debt Relief Orders and IVAs, and the page does not list DMPs.

Other options to read about

A Debt Relief Order and bankruptcy are further options with their own rules. Our comparison page sets out IVAs next to Debt Relief Orders.