IVA vs debt management plan

  • 20+ years of experience
  • One affordable monthly payment
  • All the support & help you need
  • Interest & charges may be frozen
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No fee is charged for initial advice. Fees apply if you enter a debt solution with us, and your credit rating will be affected. The debt solutions will be explained in full. Some solutions result in debt write-off.

Free and impartial debt advice is available at www.moneyhelper.org.uk

Debt Help UK

Debts we can help you with:

  • Credit cards
  • Payday loans
  • Store cards
  • Council tax arrears
  • Loans
  • Overdrafts
  • Catalogues
  • HMRC debts

While IVAs and DMPs can help with most unsecured debts, some priority debts, such as student debts, matrimonial debts, mortgages, secured loans, or certain court fines, cannot be included and must be paid separately. For full debt advice, you can speak to one of our advisors.

How does an IVA work?

An Individual Voluntary Arrangement (IVA) is a formal agreement based on what you can realistically afford. We look at your income and essential expenses to determine a sustainable monthly payment, over a period of usually 5–6 years. The process is overseen by a licensed Insolvency Practitioner who liaises with your creditors on your behalf and supervises your arrangement.

An IVA requires creditors approval. Once approved, creditors included in the plan are legally required to stop recovery action and freeze interest and charges, provided you keep to the terms. Upon successful completion of the IVA, any remaining debt included in the arrangement is written off. Payments are distributed to creditors in line with the agreed terms of your proposal.

How does a DMP work?

A Debt Management Plan (DMP) is an informal arrangement based on what you can realistically afford. We assess your income and essential expenses to determine a sustainable monthly payment. You then make one single payment to us each month, and we deal with creditors on your behalf, distributing your payment fairly among them and requesting that interest and charges are frozen (though this isn’t guaranteed).

Reduced payments mean it will take longer to clear your debts in full, but a DMP is flexible and can be adjusted if your circumstances change. 

People come to us when they are:

  • Seeking expert guidance on all available debt solutions
  • Feeling unsure about the next step to take towards managing their debts
  • Needing expert support managing creditor contact
  • Struggling to make monthly payments to their creditors
Speak to an advisor
Benefits of an IVA
  • You make affordable monthly payments usually for 5 or 6 years.
  • Unsecured debts included in the IVA are written off after successful completion.
  • Your payments will be reviewed each year to make sure you can still afford them.
  • An IVA can protect your residential property.
  • The Insolvency Practitioner deals with your creditors on your behalf and processes payments to your creditors from your payments.
  • An approved IVA prevents creditors from taking action or continuing to add further interest or charges to their debt.
  • The IVA gives your Insolvency Practitioner the power to support changes in your circumstances. For example, payment breaks.
Risks of an IVA
  • If you are a homeowner and your share of beneficial interest in your residential property is more than £10,000, the term of your IVA will be 6 years instead of 5 years. Remortgaging in the future may attract a higher interest rate.
  • In some instances, homeowners may be required to release equity from their home.
  • The IVA can fail if you do not adhere to the terms of the arrangement.  There is a risk of bankruptcy if the IVA fails.
  • An IVA requires creditors to vote whether to accept, alter or reject the arrangement. Creditors may not accept the IVA.
  • Any remaining unsecured debt included in the IVA is written off when the IVA is successfully completed.
  • An IVA means you have to live within an agreed budget for the period of the IVA, and you cannot take on new credit without your Supervisor’s consent.
  • Your credit rating will be negatively affected for 6 years, and details of your arrangement are added to the insolvency register; this is a public register.
Benefits of a DMP
  • A Debt Management Plan allows you to pay what you can afford to your creditors each month.
  • You make one monthly payment, and we distribute your payment to your creditors on your behalf.
  • Creditors may agree to accept reduced payments and freeze or reduce interest charges.
  • We communicate with your creditors on your behalf.
  • Payments can be reviewed if your circumstances change.
  • A Debt Management Plan is flexible. You can leave the plan if your situation improves or another solution becomes more suitable.
Risks of a DMP
  • Creditors don’t have to agree to the proposed payments.
  • Interest and charges may continue to be added.
  • You will need to repay your debts in full on a Debt Management Plan. Reduced payments mean it will take longer to repay your debts.
  • Making reduced payments will have a negative impact on your credit file. Creditors can issue default notices which will remain on your credit file for 6 years.
  • A Debt Management Plan does not prevent creditors from taking legal action or continuing collection activity.
  • Some debts, such as certain priority arrears, may not be suitable for a Debt Management Plan and may need to be dealt with separately.

Our 3 step process

1. Fill in the form

Tell us about your situation and and we’ll be in touch to discuss the next steps

2. Speak to an advisor

We’ll offer advice specific to your situation and explain all the solutions

3. Move forward

If you choose a solution with us, we will provide all the support you need

Take the first step today

What our clients say

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To qualify for proposing an Individual Voluntary Arrangement you must:

  • Live in England, Wales or Northern Ireland.
  • Have a regular source of income.
  • Owe more than £7,000 of unsecured debt.
  • Have a disposable income, after expenses of at least £100 per month.

Debt Consolidation

Debt consolidation involves taking out a single loan or credit card to pay off multiple debts.
Debt Consolidation

Debt Management Plans

A Debt Management Plan is an informal agreement between you and your creditors to repay your debts.
Debt Management Plans

Bankruptcy

Bankruptcy is a formal insolvency process used to deal with debts that an individual is unable to pay.
Bankruptcy

Debt Relief Orders

A Debt Relief Order (DRO) is a formal insolvency process for individuals with low income and few assets who are unable to repay their unsecured debts.
Debt Relief Orders

Frequently asked questions

Our team will call you to build a complete picture of your income, spending, and debts. This conversation is 100% confidential, and there is no obligation to proceed.

 

If you complete the form during office hours, we’ll usually call you the same day for a confidential chat. We’ll help you review your debts and budget and explain the best debt solutions for your specific needs.

You can also call us on 0161 868 2500 or email info@thedebtadvisor.hubsolv.com.  

We charge no fees for our initial advice. If you choose a solution with our firm, fees will apply and will be explained clearly before you proceed. You can also access free and impartial debt advice from the Government’s MoneyHelper service. 

IVAs can include debt write-off, depending on eligibility, but it isn’t guaranteed. During your advice call, we’ll explain your options so you know what may be possible in your circumstances. 

A DMP has no fixed end date and lasts for as long as it takes to repay your debts. The length of the plan depends on how much you owe and what you can afford to pay. Payments can be reviewed if your circumstances change.

Some creditors may agree to reduce or freeze interest and charges, but this isn’t guaranteed. As a DMP is an informal arrangement, creditors don’t have to accept the terms.

Yes, a Debt Management Plan will affect your credit rating and creditors may record missed or reduced payments on your credit file.

Yes. The Debt Advisor Ltd is authorised and regulated by the Financial Conduct Authority to provide debt advice and administer certain debt solutions. 

Get debt help

The Debt Advisor Ltd is authorised and regulated by the Financial Conduct Authority. This means we can provide debt advice and administer both formal and informal debt solutions for individuals and business owners. No fee is charged for initial advice. However, we are a commercial organisation and if you choose a solution we provide, fees will apply and will be clearly explained to you.

We will talk you through all the solutions available in England, Wales and Northern Ireland. This includes solutions like Individual Voluntary Arrangements (IVAs), Bankruptcy, Debt Relief Orders, Debt Management Plans, and Debt Consolidation (subject to eligibility), to help you understand which may be most suitable for your circumstances. If you live in Scotland, different solutions apply, please visit Scottish Debt Solutions.

All debt solutions should be very carefully considered. You may fall into arrears or incur further arrears during the period whilst we are negotiating reduced payments with your creditors as you are not maintaining your contractual payments. Payments made to creditors under a Debt Management Plan with The Debt Advisor are distributed within five working days. Payments made into an IVA are distributed in line with the terms of the proposal. If you enter an IVA, Debt Relief Order or Bankruptcy, your personal information will appear on the Insolvency Register which is searchable by the public.