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DMP vs IVA

This post has been archived and is no longer maintained. Some information or facts may have changed since the time of publication. We're no longer updating this page.

Two of the most common debt solutions that our clients opt for are DMPs and IVAs. They are two very different options and many people have to choose between the two.

How do you make such a decision? Here is our handy guide to see what is involved in each plan.

Debt Management Plans

This is an informal arrangement between you and your creditors
House could be at risk as creditors can force Bankruptcy or apply to the court to secure the debt against your property.
Legal action is possible.
Credits can still make contact with you regarding your debts.
Creditors can change their minds about the repayment plan at any time.
Flexible repayment plan.
Repay all of your debts plus interest and charges.

Apply for a DMP

Individual Voluntary Arrangement

House is safe as long as you maintain repayments.
You would usually need a minimum surplus of £100
Legally binding agreement so creditors cannot pursue any further legal action.
Creditors can only contact you when sending annual statements
Once your proposals are approved creditors cannot change their minds.
Your proposals set out your repayment plan for the duration of the IVA, any reduction must be approved by your creditors.
Any debt remaining after your IVA is completed is written off.
You can hold most official employment roles whilst in an IVA that you wouldn’t if you were to go bankrupt.

Apply for an IVA

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

Comments ⁸

Stuart wrote — October 25, 2011 12:58pm

You suggest bankruptcy is a risk in a debt management Plan when it is much more of a risk in an IVA and an OFT requirement to mention that risk. You also say a minimum £100 disposable income is needed for an IVA when in practice no one would get an IVA at that level. Who wrote this ?

Gemma wrote — October 25, 2011 1:44pm

This was written by myself and is based on our experiences.

Stuart wrote — October 25, 2011 1:50pm

Are you saying that in Payplan’s experience the risk of bankruptcy in a DMP is greater than in an IVA and that you also administer IVAs with payments of £100 a month ?

Gemma wrote — October 25, 2011 1:54pm

No greater, however it is still a risk that is worth mentioning. It is a risk with IVA’s and we talk to all of our clients about any potential risks with any plans.

As a rule we do say that the minimum amount of disposable income for an IVA is Â£100.

Stuart wrote — October 25, 2011 1:59pm

Have Payplan ever administered an IVA at £100 per month ? Apart from the vulnerability to the slightest increase in priority debt outgoings over 5 years, it would barely cover your fees would it ?

Gemma wrote — October 25, 2011 4:29pm

Yes we have, we would only ever do that it we felt that it was sustainable for the client.

Stuart wrote — October 25, 2011 8:24pm

Do you refund the fees if an IVA fails at that level or is all the risk on the customer ?

Gemma wrote — October 26, 2011 9:59am

All of the risks are explained to each and every client who enters into an IVA. We would never set up an IVA if we did not think it would be sustainable.

Comments are closed.