How different could a simple agreement between debtor and creditor be? An IVA and a Debt Management Programme are both agreements between debtors and creditors, yes, but the similarities end there. Their differences need to be examined when considering any type of debt management programme.

During the course of an IVA, a licenced Insolvency Practitioner represents the debtor’s interests and oversees the monthly transactions, whilst Debt Management is set up by a commercial DM broker and not regulated by the Government. An IVA is legally binding; a Debt Management Programme is strictly informal.

Debt management might entail negotiating frozen interest or smaller payments, but the arrangement may last for 15 or 20 years, whilst an IVA runs for just five years, after which no legal action can be taken for the same debts. This is not the case with a Debt Management Programme. However, the money saved in monthly payments under Debt Management can be substantial: the minimum for a DMP is £80 compared to £200 under an IVA. Payments can be severely reduced in an IVA, but it appears on your credit history for six years, just as bankruptcy does, and it can impact your ability to get loans or mortgages in the meantime. DMPs carry no such drawbacks.


A lender is more likely to accept a reduced settlement amount with an IVA, and they are required by law to follow the agreement once it’s been agreed upon by other creditors. In a Debt Management agreement, a creditor will usually want a complete settlement rather than negotiating terms. If they decide to negotiate amounts, they can back out at any time; the arrangement is never legally binding.

Qualifications for an IVA or Debt Management Programme also differ—to enter into a DMP, debt must be at least £2000 unsecured, owed to at least two creditors. For an IVA, debt must be at least £15,000 unsecured owed to at least three creditors. The greater the debt, the more useful an IVA is, with its ability to negotiate partial payments. Both systems carry fees to either the IVA’s Practitioner or the DMP company.

The most important factors in this decision will be 1.) how much debt you carry, 2.) whether you will need loans in the future, 3.) and how much you can pay per month on the debt. If you owe a great amount, can make a substantial monthly payment, and do not not need loans in the near future, for instance, you may want to choose an IVA over a DMP.