The answer to this question should be determined by the personal circumstances of each individual case and, because each case will be different, there won’t always be a simple answer to this question.
There will be times when the advantages of an IVA will be obvious when compared to a Debt Management Programme (DMP), for instance when the applicant needs legal protection from their creditors, or is looking to benefit from some debt write-off.
And there will also be times when a Debt Management Programme has the edge over an IVA, where perhaps the flexibility of a Debt Management Programme offers the applicant more control.
So, to suggest an IVA is always going to be the better debt solution would be ridiculous, indeed, there is no doubt that a stable and well structured Debt Management Programme can prove to be a very effective debt solution when dealing with smaller debts.
But there will always remain distinct differences between the two options and here are the main differences for you to compare.
Benefits of an IVA over a DMP:
- Large Debts IVA’s tend to be better at dealing with larger debt levels, normally, the bigger the better.
- Fixed Time Frame An IVA has a fixed term, normally 5 years after which payments stop.
- Debt Write Off Once payments stop, all outstanding debt is legally written off, even if still unpaid.
- Provides Legal Protection Stops creditors taking action to seize assets, such as your home.
- Legally Binding. An IVA binds all creditors into the agreement, even if they initially voted against it.
- Stops Creditor Harassment. Creditors cannot contact you to demand increases in your payments.
- Built-in Costs An IVA’s costs are built-in to your repayments and covered by creditors if you successfully complete the IVA.
Benefits of a DMP over an IVA:
- Smaller Debts DMP’s tend to be better at dealing with smaller debt levels, normally the smaller the better.
- Flexible Repayments DMP’s payments can be reduced or increased without seeking permission from the creditors.
- Informal Agreement DMP’s are informal agreements which means you are not legally bound to maintain payments
- Flexible Time Frame DMP’s have no fixed time frame, so the more you pay into a DMP the fast your DMP will complete.
The pointers above are really just the obvious differences between the two solutions and, as mentioned earlier, it can be pretty difficult to recognise which option would be best suited to your situation until you have spoken to a debt specialist.
With this in mind, we invite you to call My IVA Adviser now and arrange a ‘no obligation’ consultation with one of our IVA experts. All calls are held in the strictest confidence and the advice you receive will be free.
We specialise in helping people understand just how each option would work when applied to their personal circumstances, be it an Individual Voluntary Arrangement (IVA) or a Debt Management Programme.
Just call 0800 088 7503 now.
Alternatively, why not dig deeper into the subject. Go to:
the pros and cons of an Individual Voluntary Arrangement (IVA) vs a Debt Management Programme and read for yourself further differences between the two options.
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