Debt Management Plan vs IVA

Why You Need to Know the Difference

When it comes to debt, there are a variety of options available to help you get out of the financial mess you’ve found yourself in. Debt management plans (DMPs) and Individual Voluntary Arrangements (IVAs) are two of the most popular debt solutions that can help you get back on track. But what’s the difference between the two? And which one is right for you? We’re here to answer those questions and help you decide which debt solution is best for your situation.

What Is a Debt Management Plan?

A DMP is a formal agreement between you and your creditors that allows you to repay your debts with reduced or frozen interest, fees and charges. This can be achieved by paying off a single, affordable monthly payment – usually over a period of three to five years – that is tailored to your individual circumstances.

A debt management plan is a great way to get out of unmanageable debt as it can help you to regain control and stay on top of your finances. It also has the added benefit of preventing any legal action being taken against you.

What Is an IVA?

An IVA is a legally binding agreement between you and your creditors that allows you to repay your debts over a period of time – usually five years – and to write off any remaining debt that you can’t afford to pay after the end of the term. This can be a great way to get out of unmanageable debt, as it can help you to keep your assets and to prevent your creditors from taking any legal action against you.

Unlike a DMP, an IVA involves a single monthly payment that is agreed between you and your creditors. This payment is usually lower than what you were paying before, as it takes into account your individual financial circumstances.

Which Debt Solution Is Right for You?

When it comes to deciding which debt solution is best for you, there’s no one-size-fits-all answer. It all depends on your individual financial situation and what you can afford to pay back.

If you’re looking for a more flexible and affordable way to pay off your debts, a DMP could be the right choice for you. However, if you’re looking for a more comprehensive solution that can help you write off any remaining debt, an IVA could be the better option.

No matter which option you choose, it’s important to speak to an experienced debt advisor who can help you assess your situation and identify the best debt solution for you.