DMP vs IVA — which UK debt solution should you choose?
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In short. A DMP is an informal arrangement to pay an affordable monthly amount to all your creditors via a free debt charity. An IVA is a formal, legally binding agreement to pay an agreed amount over (usually) five years, after which remaining qualifying debt is written off.
Both are routes out of unaffordable unsecured debt. Always start with free regulated debt advice before signing up to anything — StepChange, National Debtline and Citizens Advice all give it for free and there is no upside to using a fee-charging firm.
Last reviewed:
Side by side
Formal arrangement
Debt Management Plan
No — informal
Individual Voluntary Arrangement
Yes — court-approved, legally binding
Who runs it
Debt Management Plan
Free debt charity (or fee-charging firm)
Individual Voluntary Arrangement
Licensed Insolvency Practitioner (fees come out of payments)
Typical length
Debt Management Plan
However long it takes to repay in full
Individual Voluntary Arrangement
Usually 5 years (6 if no equity released)
Debt written off at end
Debt Management Plan
No — pay back everything
Individual Voluntary Arrangement
Yes — remaining qualifying debt written off if you complete
Credit file impact
Debt Management Plan
Marked as 'arrangement to pay' for 6 years
Individual Voluntary Arrangement
Recorded on Insolvency Register; on credit file for 6 years
Public register
Debt Management Plan
No
Individual Voluntary Arrangement
Yes — Individual Insolvency Register
Can be cancelled
Debt Management Plan
Yes — anytime
Individual Voluntary Arrangement
Failure can lead to bankruptcy
Suits debt level
Debt Management Plan
Roughly £5,000–£20,000
Individual Voluntary Arrangement
Roughly £15,000+ (no fixed minimum)
When Debt Management Plan usually wins
- Your situation is temporary and you can repay in full eventually
- You want flexibility to cancel and restart
- You're not eligible for or don't want an IVA's formality
When Individual Voluntary Arrangement usually wins
- You can't realistically repay everything within a reasonable time
- Your debts are larger and from multiple creditors
- You want creditor action to stop while you pay
- You can commit to ~5 years of disciplined payments
FAQ
- Will a DMP or IVA affect my job?
- Most jobs are unaffected. Some regulated roles (financial services, law, military commissions) require employer notification or can be restricted by an IVA — check your employment contract.
- Are debt charities really free?
- Yes. StepChange, National Debtline (run by the Money Advice Trust) and Citizens Advice are funded by donations from the financial sector and government grants. You will never be charged for advice or for setting up a DMP.
- What happens if I can't keep up payments on an IVA?
- Speak to your Insolvency Practitioner immediately. They may agree a variation (reduced payments or extended term). If the IVA fails, creditors can take recovery action and you may face bankruptcy.