IVA vs Debt Management Plan
Compare how IVAs and Debt Management Plans differ, including monthly payments, debt write-off, creditor protection and how long each solution lasts.
Compare the key differences
Both IVAs and Debt Management Plans help people repay unsecured debts through affordable monthly payments. However, there are important differences between how each solution works.
| Feature | IVA | DMP |
|---|---|---|
| Legally binding | ✓ Yes | ✕ No |
| Debt write-off possible | ✓ Yes | ✕ No |
| Fixed end date | Usually 5–6 years | No fixed end date |
| Interest and charges frozen | Frozen once approved | Not guaranteed |
| Creditor contact | Usually stopped | Can continue |
| Monthly payments | Based on affordability | Based on affordability |
| Typical debt level | £7,000+ | No minimum |
The right solution depends on your circumstances and what you can realistically afford.
Similarities
- Both solutions are designed to make debt repayments more affordable.
- Both combine eligible unsecured debts into one monthly payment.
- Both require you to maintain priority payments such as rent, mortgage and utilities.
Choosing between an IVA and DMP
Legal protection
An IVA is legally binding once approved, meaning creditors included in the arrangement must follow its terms. A DMP is informal, so creditors are not required to freeze interest or stop collection activity.
Repayment term
IVAs usually last 5 or 6 years, giving you a clearer end date. DMPs can continue for longer depending on your debts and monthly payments.
Debt write-off
An IVA may allow some unaffordable debt to be written off at the end of the arrangement. A DMP is designed for repaying debts in full.
Which option could suit your situation?
The right solution depends on your debts, income and financial circumstances.
IVA
- You should have money available each month for repayments.
- Typically suited for debts of £7,000 or more owed to multiple creditors.
- Priority bills such as rent, mortgage and utilities are not included.
Debt Management Plan
- You will need money available each month for repayments.
- Creditors are not required to freeze interest or charges.
- Priority bills such as rent, mortgage and utilities are not included.
You may qualify for an IVA if:
- You owe £7,000 or more in debt
- You owe money to two or more creditors
- You have money available each month for repayments
Residents in England and Wales have a right to debt help, and several tried and tested solutions can help write off debt, reduce pressure from creditors and freeze interest and charges.
If eligible, an Individual Voluntary Arrangement (IVA) could help you take control of your debts.
Free, confidential and with no obligation. Checking your options will not affect your credit score.
- DEBT FORGIVENESS
Creditors must legally write off any remaining balance when you complete your IVA. - AFFORDABLE PAYMENTS
Your repayments are based on what you can realistically afford each month. - LEGAL PROTECTION
An IVA stops creditors from chasing you, including bailiffs and legal action. - INTEREST & CHARGES FROZEN
No more rising debt from added fees.
A typical example of an IVA*
| Loan(s) | £5,000 |
| Overdraft | £3,000 |
| Credit Card(s) | £13,500 |
| Store Card(s) | £4,500 |
| Utility Bill(s) | £1,500 |
| Total Owed | £27,500 |
Your monthly debt repayments:
£717
Previous Payment
MONTHLY SAVING £580
£137
New Repayment
DEBT REDUCED BY 78%
*A debt write-off amount of 80% is realistic based on the average figures of IVA clients between April 2024 to April 2025. We assess each customer individually based on their circumstances and payments to the IVA are based on what is realistic and affordable.
Use our free IVA Calculator to estimate your new monthly payment.
Common questions about IVAs and DMPs
You cannot have a Debt Management Plan and an IVA at the same time because an IVA is designed to include your eligible unsecured debts within one formal agreement.
If you are already on a DMP, you may still be able to apply for an IVA. Because a DMP is informal, it can usually be cancelled if another solution is more suitable.
An IVA is legally binding once approved, meaning it cannot simply be cancelled without consequences.
If an IVA application is not approved, a Debt Management Plan may still be an alternative option.
An IVA will affect your credit score and will usually remain on your credit file for six years from the date it is approved. The impact depends on your financial circumstances and credit history before entering the IVA.
Most IVAs last for 5 or 6 years. If you are a homeowner, your IVA may be extended by 12 months if equity cannot be released from your property.
Once completed successfully, any remaining eligible unsecured debt included in the IVA is written off.
A Debt Management Plan combines eligible unsecured debts into one monthly payment based on affordability. Creditors may also agree to freeze interest and charges, although this is not guaranteed.
Because a DMP is informal, it can usually be cancelled or changed if your circumstances change.
An IVA is legally binding once approved, which means creditors included in the arrangement must follow its terms. Interest and charges are usually frozen, and any remaining eligible unsecured debt is written off at the end of the IVA if it is completed successfully.
IVAs also involve one affordable monthly payment based on your financial circumstances.
If an IVA is not approved, other debt solutions may still be available depending on your circumstances. A Debt Management Plan may be an alternative option for some people.
Thousands across the UK have explored whether an IVA could help.
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