IVA or DMP

Should I switch from a DMP to an IVA?

We would only ever have offered you a DMP if, following an advice session, it was considered a suitable option for you and your debts. It may have been that, at the time, an IVA was also suitable, and this may have also been an option you considered before deciding to go ahead with the DMP.

In this case, think back to the reasons why you decided on the DMP and whether since then your situation has changed. Regardless of the plan you’re in, you’ll need to complete a review every year anyway, which will help us to make sure you’re still in the most appropriate solution for your needs.

If an IVA wasn’t a suitable option for you when you had your advice session, it’s worth checking in with your case officer to see whether we can review your budget and look at this as an option for you again.

What’s an IVA?

• An IVA is a type of debt solution that allows you to pay all – or part of – your debts
• It’s a formal agreement with your creditors and is legally binding so they can’t make changes once your proposal has been accepted
• An IVA usually lasts for five or six years – if you own property (either mortgaged or outright), any equity you have will be taken into account. Usually this means your IVA will last for six years, rather than five, to increase the ‘return’ to your creditors.
• In an IVA, you make one agreed affordable monthly payment to your creditors and at the end of your IVA, the remaining debt will be written off
• Creditors won’t be able to continue adding interest and charges to the debts once you’re in an IVA
• Creditors won’t be able to pursue – or threaten you with – legal action once you’re in an IVA
• Creditors won’t be able to contact you to contact you about the debts once you’re in an IVA (with the exception of letters they’re legally obligated to send)
• In an IVA, it’s important you stick to the agreed budget for your day-to-day living costs
• If you don’t keep up with your agreed payments when in an IVA, your creditors may make a request for you to be declared bankrupt
• Whilst in an IVA, you’ll be appointed a Supervisor. It’s important to keep in touch with them and comply with the rules of your agreement to prevent the IVA from failing
• An IVA will stay on your credit file for six years from the date it was approved (or until it’s finished, should it go on for longer than six years)

What’s a DMP?

• A DMP is a type of debt solution that allows you to pay off your debts in full
• It’s an informal agreement with your creditors so they can dictate changes throughout the plan
• The length of time it lasts depends on how much you owe and how much you can repay each month, as well as whether your creditors agree to freeze interest and charges
• In a DMP, you make one agreed affordable monthly payment to your creditors until the debts are paid off
• Creditors can choose to continue adding interest and charges, pursue legal action and still contact you to chase the debts, although we’ll always work closely with your creditors to try and prevent this wherever possible
• In a DMP, it’s important you stick to the agreed budget for your day-to-day living costs, although this can be flexible if you find you need to make changes, you just need to let us know so we can check it’s still the best option for you
• Because this plan is an informal agreement, it means that your creditors could still decide to issue a default notice whilst you’re in your DMP. Each default notice will stay on your credit file for six years from the date it’s listed

Which one is right for you?

Don’t worry – this isn’t something you’ll need to decide on your own, that’s where our support comes in.

In order to work out whether a DMP or an IVA is right for you – or whether there’s another solution even more suitable – we’ll take a look at your circumstances and work out what’s best.

It’s not a ‘one size fits all approach’ and it’s really important we consider your full circumstances to work out the most suitable way forward.

Get debt help today

If you’re struggling with debt and want our support, we’re here and ready to help:

• Call us free on 0800 316 1833
• Complete our online form and see what debt solutions are available to you
• Speak to us over Live Chat