A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
IVA vs Debt Management Plan (DMP)
Both an Individual Voluntary Arrangement (IVA) and a Debt Management Plan (DMP) are ways to deal with unaffordable personal debt - but they differ significantly in formality, legal protection, and outcome.
The Key Difference
- An IVA is a formal, legally binding arrangement supervised by a licensed insolvency practitioner. If 75% of voting creditors agree, all unsecured creditors are bound - and a portion of debt is written off at the end.
- A DMP is an informal, non-binding arrangement, typically managed by a debt advice service. Creditors are asked to accept reduced payments, but they are not legally bound and can change their minds.
At a Glance
| IVA | DMP | |
|---|---|---|
| Formality | Formal, legally binding | Informal, non-binding |
| Supervisor | Licensed insolvency practitioner | Debt advice service |
| Creditors bound? | Yes - if 75% agree | No - creditors can opt out |
| Debt written off? | Yes - a portion at the end | No - full debt repaid over time |
| Duration | Typically 5 to 6 years | Until debts are repaid |
| Legal protection | Yes - creditors cannot pursue you | No - creditors can still act |
| On credit file | Yes - 6 years | May be noted |
When an IVA Is Better
An IVA suits individuals who:
- Have significant unsecured debts they cannot repay in full
- Have a regular income to support monthly payments
- Want legal protection from creditor action
- Want a defined end date with a portion of debt written off
When a DMP Is Better
A DMP may suit individuals who:
- Have smaller debts they can repay in full over time
- Want a flexible, informal arrangement
- Cannot afford the monthly payments an IVA would require
- Prefer to avoid the formal insolvency record
How to Choose
The choice depends on the size of your debts, your income, whether you want legal protection, and whether you want a portion written off. A licensed practitioner can help you assess honestly.
Speak to a Licensed Practitioner
Our Manchester-based practitioners advise on IVAs, DMPs, and other personal debt solutions. We'll assess your situation honestly and tell you which is right for you - free and confidential.