IVA vs DMP: how an IVA and a debt management plan differ
An IVA is a legally binding arrangement that usually ends after 5 or 6 years, when you no longer owe the debts it included. A debt management plan is an informal plan to repay all your debts that creditors do not have to accept; we cannot arrange one, so this page points you to free help for a DMP.
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What is the difference between an IVA and a debt management plan?
The difference between an IVA and a debt management plan is that an IVA is a legally binding arrangement under the Insolvency Act 1986 that your creditors vote on, while a debt management plan is an informal agreement to repay all of your debts that creditors do not have to accept (section 260 (opens in a new tab); GOV.UK on debt management plans (opens in a new tab)).
GOV.UK says a debt management plan is usually used when you can only afford to pay creditors a small amount each month, or when you will be able to make repayments in a few months. Unless the plan says otherwise, creditors can still ask for the full debt later or take action to recover it, even while you keep up your payments.
An IVA starts when creditors holding three-quarters or more in value of the debts of those who respond vote for it (rule 15.34 (opens in a new tab)), and then it binds all of them. Our guides cover how an IVA works and how a debt management plan works on their own.
| IVA | Debt management plan | |
|---|---|---|
| Is it legally binding? | Yes. Once approved it binds every creditor entitled to vote, including any who voted against | No. Creditors do not have to agree, and unless the plan says otherwise they can still ask for the full debt or take action |
| How much you repay | What you can afford over the IVA; then you no longer owe the debts it included | All of your debts |
| How long it lasts | Usually 5 or 6 years | Until the debts are repaid; GOV.UK sets no fixed length |
| Who sets it up | A licensed insolvency practitioner | You, with your creditors, or a debt management company authorised by the FCA |
| Fees | Usually a set-up fee and a handling fee, taken from your payments | Some companies charge set-up and handling fees; some debt charities charge nothing |
| Debts it covers | Unsecured debts in the proposal; secured lenders keep their security | Unsecured debts only |
| Public record | Individual Insolvency Register until 3 months after it ends; credit file for 6 years from the start | Not on the Individual Insolvency Register |
| If you stop paying | The IVA can be cancelled and the supervisor can make you bankrupt | The plan can be cancelled |
England and Wales. Checked against GOV.UK, the IVA protocol and legislation.gov.uk on 4 November 2026.
Which is better, an IVA or a debt management plan?
An IVA binds all creditors who could vote and usually ends in 5 to 6 years, when the completion certificate releases you from the rest of the debts included in it, while a debt management plan is informal, not binding on creditors and lasts until the debts are repaid in full (section 260 (opens in a new tab); protocol standard terms (opens in a new tab); GOV.UK (opens in a new tab)).
Neither is better for everyone: a debt management plan suits people who can repay everything they owe given time, and the IVA protocol says that if a plan would clear your debts over a similar period and pay your creditors significantly more, a protocol IVA is unlikely to suit you (IVA protocol (opens in a new tab), paragraph 17).
An IVA may be worth considering if you cannot repay in full within a reasonable time. The protocol says a protocol IVA usually suits someone with a regular income other than benefits, debts of £7,000 or more and uncomplicated assets, who does not qualify for a debt relief order.
An IVA has real downsides. Its fees come out of your payments, and the first payments go more to fees than to your debts. It stays on your credit file for 6 years from the start, and if it is cancelled your creditors can chase you again, add back frozen interest and charges, and you get no refund (key facts (opens in a new tab)).
A licensed insolvency practitioner must explain both options, with their likely costs, before an IVA is proposed (SIP 3.1 (opens in a new tab)). NTF Financial Solutions is not authorised by the Financial Conduct Authority and cannot advise on, arrange or manage a debt management plan, start Breathing Space or act on a debt relief order. Our page comparing every debt solution in England and Wales sets out the others.
Can I change from a DMP to an IVA?
Yes, you can move from a debt management plan to an IVA: being in a plan does not stop you proposing one, and the IVA protocol simply asks you to tell the nominee if you have been in, or tried to get, a debt management plan in the last 24 months (IVA protocol (opens in a new tab), paragraph 28).
The practitioner will look at your situation afresh, including your income, spending and debts, and must explain all your options again, a debt management plan among them. The IVA binds your creditors only once they approve it, so talk to your plan provider about how and when to end the plan.
Where can I get a free debt management plan?
You can get a free debt management plan from some debt charities; nidirect, for example, notes that StepChange Debt Charity offers free debt management plans (nidirect (opens in a new tab)), and GOV.UK lists organisations that give free, confidential and independent debt advice in England and Wales (GOV.UK (opens in a new tab)).
If you use a company instead, GOV.UK says it should be a debt management company authorised by the Financial Conduct Authority, which you can check on the Financial Services Register. Some companies charge a set-up fee and a handling fee each time you pay, so make sure you understand the costs and how you pay them (GOV.UK (opens in a new tab)).
NTF Financial Solutions is not authorised by the Financial Conduct Authority. We cannot set up a debt management plan for you or recommend a provider.
Free, independent debt advice
GOV.UK lists organisations that give “free, confidential and independent advice on dealing with debt problems”. Ask the adviser whether a debt management plan, an IVA or another option fits your situation.
Find free debt advice on GOV.UK (opens in a new tab)These services are independent of NTF Financial Solutions.
More questions people ask
What are the disadvantages of having an IVA?
An IVA stays on your credit file for 6 years from the start, which may make credit hard to get. Its fees come out of your payments, and in a protocol IVA you need your supervisor’s approval for credit over £500. If it is cancelled, creditors can chase you again and add frozen interest and charges, and you get no refund of what you paid.
Can I change my IVA to a DMP?
Speak to your supervisor first. You can ask to cancel an IVA, but you get no refund of what you have paid, and once it ends your creditors can chase you again and may claim the interest and charges that were frozen. A free debt adviser can then look at whether a debt management plan would work.
What happens after 5 years of an IVA?
Most protocol IVAs end after 5 years with a certificate of completion, and you no longer owe the debts included. If your home equity is £10,000 or more, the IVA runs for 6 years. The credit file entry stays until 6 years after the IVA started.
Do creditors have to accept a debt management plan?
No. GOV.UK says the company asks your creditors to agree to the plan and they do not have to. Unless the agreement says otherwise, they can still ask for the full debt later or take action to recover it.
Sources
The legislation, court decisions and official guidance this page relies on. We last checked the page against them on .
- Insolvency Act 1986, section 260 (opens in a new tab): an approved IVA binds every creditor entitled to vote (legislation.gov.uk)
- Insolvency (England and Wales) Rules 2016, rule 15.34 (opens in a new tab): the creditors’ vote that approves an IVA (legislation.gov.uk)
- Options for dealing with your debts: Individual Voluntary Arrangements (opens in a new tab): how an IVA starts, its usual fees and the public register (GOV.UK)
- Options for dealing with your debts: Debt Management Plans (opens in a new tab): how a debt management plan works and what creditors can still do (GOV.UK)
- Key facts: Protocol Individual Voluntary Arrangements (IVA) (opens in a new tab): fees, the credit file, your home and cancelling a protocol IVA (Insolvency Service, GOV.UK)
Show all 11 sourcesShow fewer sources
- IVA protocol 2025 (opens in a new tab): who a protocol IVA suits, its length and what the nominee must explain (Insolvency Service, GOV.UK)
- IVA protocol 2025, Annex 1: standard terms and conditions (opens in a new tab): the £500 credit limit without the supervisor’s approval (Insolvency Service, GOV.UK)
- Statement of Insolvency Practice 3.1 (England and Wales): Individual voluntary arrangements (opens in a new tab): what a practitioner must explain before an IVA is proposed (ICAEW)
- Get free debt advice (opens in a new tab): organisations giving free, confidential and independent debt advice (GOV.UK)
- Search the bankruptcy and insolvency register (opens in a new tab): what the Individual Insolvency Register shows and when records are removed (GOV.UK)
- Debt repayment options (opens in a new tab): the options in Northern Ireland, and StepChange’s free debt management plans (nidirect, Northern Ireland Government)
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May not be suitable in all circumstances. Fees apply. Your credit rating may be affected. How fees and risks work
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