IVA or DMP: Which One Is Suitable for You?

Should you choose an IVA or DMP? This article explains the differences between an Individual Voluntary Arrangement (IVA) and a Debt Management Plan (DMP).

 

What is the difference between an IVA and a DMP?

 

If you a looking for a suitable debt solution and wondering between an IVA or DMP. This table highlights the key differences between the two:

IVA
DMP
Formal binding agreement – Creditors cannot take further action against you. Informal agreement – Creditors can still take legal action against you
Lasts for 5 years No time limit – Lasts until your debt is paid off in full
Most debt is written off at the end All debt is repaid
WIll stay on your credit file for 6 years from the date it is approved. Will stay on your credit file for 6 years from the date the last default was issued.

 

DMP to IVA, what will be the advantage?

 

If your DMP isn’t reducing your debt, then an IVA could be the best option for you. Especially if you have assets you’d like to protect. The IVA term is typically 5 years. Although it can be extended by another 12 months if you are unable to remortgage in the final year.

If you have been offered an IVA now, having been offered a DMP 12 months ago it may be due to your monthly disposable income increasing. This is to allow you to meet the minimum return to creditors required in an IVA. This is traditionally set at around 15%.

For more information, please see our article on IVA restrictions.

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