IVA vs Debts Management

Both IVA and Debts Management are agreements with your creditor, where you agree to pay back a set about each month. But there are a number of firm differences between the two:

• Type of Agreement.
  An IVA is a legally binding agreement between the debtor and the creditor. Once an IVA has been approved then the creditor cannot change their mind and pull out of the plan.
  Whereas a debt management plan is an informal agreement and creditors do not have to accept your offer.
• Debt written off?
  Only an IVA can write debt off, and it is not possible to do so with a debts management plan.
• Amount of debt.
  An IVA can only be arranged if you have over £15,000 worth of debt. If you have less than this amount it is likely that you will only get accepted for a debt management plan
• Flexibility.
  A debt management plan is the most flexible of the two, and your payments can be changed in accordance to your personal circumstances. But an IVA is a legally binding process and you must commit to making that payment level each month.

Entering into an IVA may adversely affect your credit rating for up to six years from the date of approval.

Your property will be protected within an IVA but you may be required to release all or part of any equity during the period of the arrangement.

Failure to complete the term of an IVA can result in bankruptcy.

(In Scotland, a PTD is the equivalent to an IVA.)