Key points
- An IVA is legally binding on your creditors; a DMP isn't
- Interest is frozen in an IVA; in a DMP it's up to creditors
- A DMP repays debts in full, so it can take longer
- You can leave a DMP at any time
- Both can affect your credit file
Key differences
| DMP | IVA | |
|---|---|---|
| Legal status | Informal | Legally binding once approved |
| Interest & charges | Creditors may freeze them, but don't have to | Frozen on included debts |
| Debt written off? | No, debts repaid in full | Remaining included debt written off at the end |
| How long | Until debts are repaid | Usually 5–6 years |
| Flexibility | Very flexible, cancel any time | Fixed terms, missed payments can make it fail |
| Cost | Free from not-for-profit providers | Fees usually come from your payments |
Which is better?
A DMP can suit people who could repay everything within a reasonable time if interest was frozen. An IVA may suit people whose debts would take many years to repay and who want legal protection from creditors. The right choice depends on your figures, so get a proper review.
Frequently asked questions
Can I change from a DMP to an IVA?
Yes. Many people start with a DMP and later move to an IVA if repaying in full isn't realistic.
Will creditors stop contacting me?
In an IVA, creditors bound by it must stop chasing you. In a DMP, most creditors deal with the provider, but they aren't legally required to.
Which affects my credit score more?
Both can affect it. An IVA is recorded for six years. A DMP isn't recorded as such, but reduced payments and defaults usually show on your file.
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Sources and further reading
This guide is general information, not advice, and was correct when last updated. Rules and limits can change. Speak to a regulated adviser about your own situation.