Which is better (IVA) or (DMP)?
Individual voluntary arrangements (IVAs) and debt management plans (DMPs) are two options for making manageable debt payments. However, these debt remedies differ greatly and can have a variety of effects on you. So the basic difference between IVA vs DMP is: An IVA is a legally binding debt solution and a type of insolvency. A DMP is a non-binding agreement between you and your creditors.
How can I tell if an IVA or DMP is the appropriate choice for me?
You should always seek free and independent debt guidance to determine which debt-reduction options are appropriate for your situation.
There are several advertisements for businesses that promise to be able to “write off debt with government debt solutions,” such as IVAs. The Advertising Standards Authority has taken action against such advertisers, whose advertisements can be deceptive and frequently push debt solutions that are profitable for them.
Before offering a debt solution to you, a debt counsellor will consider the following factors:
- What you owe and what kind of debt you have
- Whether a solution might have an impact on your assets or career.
- How much can you afford to put towards paying off your debts?
- If you believe your situation will improve in the coming years,
Is it possible to switch from a DMP to an IVA?
You should contact your Debt Management Plan provider if your circumstances have changed since you were recommended a DMP and started setting one up.
If your circumstances change, a DMP may no longer be appropriate for you. This could happen if:
- You can now file for bankruptcy without fear of losing your job or your house.
- can now contribute by paying an IVA lump sum
- Having discovered that paying off your DMP is taking too long
Your DMP provider will need to re-evaluate your position and make new suggestions, which may or may not include an IV
How IVA could be better option for if if you are in DMP?
You may be debt-free in 5 years if you use an IVA. 80 percent of your debt can be written off1, and the rest can be paid back in manageable monthly payments with no additional interest, no legal threats, and no fuss from your creditors.
You’ll have to stick to a strict budget, but your debts will be paid off, and you’ll have enough money left over to live your life.
IVAs aren’t the only debt relief options available – see our list of other debt relief options.
You’ll be agreeing to a 5-year government-approved plan, and if you miss payments, your IVA may collapse, resulting in your creditors filing a bankruptcy petition against you. However, if your situation changes, there is room for flexibility.
Your IVA will be documented on your credit file and placed on the public Insolvency Register, affecting your credit rating. However, if you’ve already missed payments, you’re likely to have a less-than-ideal credit rating. After a six-year period, your IVA will be removed off your credit report. Interested? To learn more about IVAs, click on the following links:
- I’m not sure what an IVA is or if it’s right for me.
- Self-employed? Learn more about IVAs for self-employed people.
- What are the primary distinctions between a DMP and an IVA?
- What impact will an IVA have on me and my life?
- Is it permissible for me to terminate my IVA?
Differentiation between DMP and IVA.
If you’re struggling with debt and aren’t sure which path to pursue, we’ve put up a list of the key distinctions between two of the most common debt-relief options: Individual Voluntary Arrangements and Debt Management Plans (IVA vs DMP).
Here’s a table to help you compare the two:
Individual Voluntary Arrangement (IVA)
- In most cases, IVAs are for a period of five years.
- At the conclusion of the IVA, a significant percentage of the debt may be written off.
- All unsecured creditors bound by the IVA are unable to take further legal action once the IVA has been granted.
- Because an IVA is legally binding, creditors are unable to change it once it has been approved. They have the right to request changes to your plan, but if approved, the agreement is final.
- Contact with your creditors will cease during your IVA, with the exception of statements and legally required letters (changes in contact information or the debt payment may be handled by another party). Allow roughly 3 months after your IVA has been approved for creditor administration departments to update their system details.
- Your IVA will appear on your credit report for six years from the day it was approved, or until it is completed if it lasts longer.
Debt Management Plan (DMP)
- DMPs will continue until the debt is completely paid off, including all interest and fees.
- All debts are repaid in a DMP. There is no certainty that creditors will freeze interest and charges.
- Because a DMP is an informal debt plan, creditors can take legal action against you.
- A DMP is informal, and creditors can make revisions at any time throughout the plan’s duration.
- During the course of a DMP, creditors may contact you at any time. They may potentially file a lawsuit against you.
- During the course of a DMP, you may experience difficulties with your credit file. A default notice can be issued at any time during your DMP and will remain on your file for six years from the date of the most recent default.
Get your IVA advice today!
We’re here to assist you. Debt counsel is now available for free online. If you seeks any kind of the IVA related help or advice contact us.