Side-by-side comparison
| Feature | DMP | IVA |
|---|---|---|
| Legally binding | No | Yes, on all included creditors once approved |
| Debt written off | No — you repay in full (unless you agree settlements) | Yes — the unpaid balance at successful completion (amount varies) |
| Length | Until debts are repaid — no fixed term | Usually 5–6 years |
| Who sets it up | A debt charity, a DMP company or you | A licensed insolvency practitioner (IP) |
| Creditor agreement | Each creditor decides individually | Approved if creditors owed 75%+ (by value, of those voting) agree |
| Interest and charges | Creditors are asked to freeze — not guaranteed | Frozen |
| Protection from court action | No | Yes, for included creditors |
| Minimum debt | None | None in law; most IPs want roughly £7,000–£10,000+ and 2+ creditors |
| Cost | Free from charities; fee-charging firms exist | IP fees paid out of your monthly payments |
| Public record | No | Individual Insolvency Register until it ends |
| Credit file | Defaults/arrangements to pay; defaults drop off 6 years after the default date | 6 years from the IVA's approval date |
| Home | Not affected by the plan itself | Homeowners may be asked to release equity in the final year, or extend by up to 12 months |
| Windfalls and pay rises | Your choice how to use a lump sum; payments reviewed if income rises | Usually must go to creditors under the IVA terms |
| Flexibility | Change or end it any time | Fixed terms; changes need creditor approval |
| If it goes wrong | Creditors may restart interest and collection | A failed IVA can lead to bankruptcy |
How each one works
How does a DMP work?
You agree a budget using the Standard Financial Statement, and your surplus becomes one monthly payment. A provider — usually a free charity such as StepChange or PayPlan — shares it pro rata between your creditors and asks them to freeze interest. Because it's informal, creditors can refuse, but most accept reasonable offers. Read our full debt management plan guide.
How does an IVA work?
An insolvency practitioner draws up a proposal based on your budget, usually for 5–6 years of monthly payments. Creditors vote; if creditors owed at least 75% of the debt (by value, of those who vote) agree, the IVA binds all the creditors included in it. Interest stops and they can't take action against you. If you complete it, the unsecured debt still outstanding is written off. Read our IVA guide.
Worked example: £30,000 of debt and £300 a month
This simplified example assumes interest is frozen in both cases and your payment stays the same. Real figures depend on your circumstances and your creditors.
| Free DMP | IVA (5 years) | |
|---|---|---|
| Monthly payment | £300 | £300 |
| How long | 8 years 4 months (100 payments) | 5 years (60 payments) |
| Total you pay | £30,000 | £18,000 |
| Fees | £0 | Paid out of the £18,000 (the IP's fees are set out in the proposal) |
| Written off | £0 | Whatever is unpaid at the end (here roughly £12,000 of the original debt, plus whatever went on fees) |
| Homeowner? | No change | May be asked to release equity in year 5, or extend by up to 12 months |
On these numbers the IVA costs less in total and ends sooner — but it is a formal insolvency on a public register, fees reduce what creditors get, and if your circumstances change and you can't keep it up, it may fail. With a smaller debt, say £10,000 at £300 a month, a DMP would take just 2 years 10 months and an IVA would usually make little sense. Try the debt calculator with your own figures.
Which is better for you?
A DMP may suit you if:
- You could repay everything in a reasonable time (a few years) with reduced payments
- Your income is irregular or may change
- Your debts are relatively small or with just one or two creditors
- You want to avoid formal insolvency because of your job or home
- You may get extra money in future and want to keep control of it
An IVA may suit you if:
- A DMP would take a very long time to clear your debts
- You have a stable income and can commit for 5–6 years
- Creditors are refusing a DMP or threatening court action
- You want interest frozen and creditors bound by law
- You have assets (such as home equity) you want to protect from bankruptcy
Also consider the alternatives: if your surplus is £75 a month or less, your debts are up to £50,000 and you have few assets, a Debt Relief Order may write off debts after 12 months — see DMP vs DRO. If you have little income and no home equity, compare IVA vs bankruptcy and DMP vs bankruptcy.
Home, job and credit file
Which is worse for your credit file, an IVA or a DMP?
Both damage your credit rating. An IVA is recorded on your credit file for six years from the date it's approved and on the Individual Insolvency Register until it ends. In a DMP, accounts are usually marked with an arrangement to pay or a default, and each default disappears six years after its date. If your accounts are already defaulted, a DMP's effect may wear off sooner; if a DMP would last ten years or more, an IVA can mean a clean file sooner. See how a DMP shows on your credit file.
Will an IVA or DMP affect my home?
A DMP doesn't affect your home directly, though creditors keep the right to go to court. In an IVA, homeowners with equity are usually asked to try to release some in the final year (often by remortgaging); if that isn't possible, the IVA may be extended by up to 12 months instead. You won't normally be forced to sell.
Will either affect my job?
A DMP rarely affects employment. An IVA can matter in some roles — for example certain financial services, legal or security-vetted jobs — so check your employment contract or professional body rules before choosing one.
Switching from a DMP to an IVA (or back)
You can move from a DMP to an IVA if your debts are taking too long to clear or creditors stop cooperating. Payments already made through the DMP reduce the balances included in the IVA. Moving from an IVA to a DMP is harder: you'd usually need the IVA to be ended, and if an IVA fails, the supervisor can petition for your bankruptcy. Get advice before changing plans.
Frequently asked questions
What is the main difference between an IVA and a DMP?
An IVA is a legally binding insolvency agreement, usually lasting 5–6 years, after which remaining debt is written off. A DMP is an informal plan to repay debts in full at an affordable rate, with no fixed end date and no write-off. A DMP is free from charities; IVA fees come out of your payments.
Is an IVA better than a DMP?
Not automatically. An IVA can be better if a DMP would take many years and you have a stable income, because remaining debt is written off. A DMP is often better if you can repay in a few years, want flexibility or want to avoid formal insolvency. A free debt adviser can compare both with your figures.
Can a DMP be cancelled the same as an IVA?
No. You can end a DMP at any time without legal consequences, although creditors may restart interest and collection. An IVA is legally binding: if you stop paying, it can fail, and the supervisor can petition for your bankruptcy. Changes to an IVA need creditor approval.
How much debt do you need for an IVA or a DMP?
There's no legal minimum for either. A DMP can include a single debt of any size. In practice most insolvency practitioners only propose IVAs for debts of roughly £7,000–£10,000 or more owed to at least two creditors.
Can I switch from a DMP to an IVA?
Yes. If a DMP is taking too long or creditors won't cooperate, an insolvency practitioner can propose an IVA. The balances still owed after your DMP payments are what go into the IVA. Get free advice first to check it's the right move.
Is a DMP or IVA on a public register?
An IVA is listed on the Individual Insolvency Register until it ends. A DMP is not on any public register; it only appears on your credit file through the way creditors report your accounts.
Get free, impartial advice
A free debt adviser can tell you whether a DMP, IVA or another option suits you — without selling you anything.