An IVA and a Debt Management Plan both turn your debts into one monthly payment, but they are very different underneath. One writes off debt and is binding; the other is flexible but repays in full. Here is the comparison.
| Feature | IVA | Debt Management Plan |
|---|---|---|
| What it is | A formal, legally binding insolvency arrangement. | An informal arrangement to pay your debts at a reduced rate. |
| Legally binding | Yes, once 75% by value of creditors approve it. | No. You or your creditors can change or end it at any time. |
| Debt written off | Yes, remaining included debt is written off at the end. | No. You repay your debts in full, just more slowly. |
| Interest and charges | Normally frozen once it starts. | Creditors may freeze them, but do not have to. |
| How long | A fixed term, usually 5 to 6 years. | As long as it takes to repay, with no fixed end. |
| Flexibility | Fixed, with annual reviews. | Very flexible, you can adjust payments. |
| Cost | Fees taken from your monthly payments. | Free through a charity, or fees if you use a commercial firm. |
| Public register | Yes, on the Individual Insolvency Register. | No. |
| Credit file | 6 years from the start. | Affected while it runs and for 6 years after each default. |
A DMP can be a good fit if you can afford to repay your debts in full given a bit more time and breathing room, and you would rather avoid formal insolvency. It is flexible, you can leave whenever you like, and you can set one up for free through a debt charity.
An IVA tends to suit people who cannot realistically repay everything they owe, and who want the certainty of a fixed end date with the rest written off. The trade-off is that it is formal, binding, appears on a public register, and carries fees.
If you are leaning towards a DMP, remember you do not need to pay a commercial firm to set one up, a charity will do it for nothing.
They will go through both, and the other options, honestly, with no obligation to go ahead.
You never have to pay anyone to understand your options. These services are free, independent and will go through every route with you.