Why an IVA can be better than Debt Management Plan

Individual Voluntary Agreement is a legally binding contract between a debtor and their creditors supervised by a legally licensed practitioner to pay back their creditors at an amount they can afford monthly over 5-6 years. Once the final payment is made, any other debt can be written off.

Looking at the two ways of paying off debts, I can say Individual Voluntary Agreement is much better due to some advantages o it has over debt management

In an Individual Voluntary Agreement, all interest and charges are frozen as long as all the repayment, interest etc. are made, but in debt plan management it might not necessarily be froze. Iva takes half the time to complete payment compared with a debt management plan with the same monthly contribution. Individual Voluntary agreement has standard fees as long as you make all your repayment, it is removed from the amount sent to your creditors and doesn’t affect your monthly contribution. Los of debt management charges fees too.

Individual Voluntary Agreement can be tough just like Debt management plan. In both cases you pay what’s left after living expenses usually for five to six years, but in a clear debt IVA, only 51% of your debt is repaid provided you make every monthly repayment.

Half of the debt are mostly written off in Iva or more than half of the IVA’s, but in debt management plan all your debts and interest are not frozen

        IVA Free Debt management plan
Total unsecured debt£10,000£10,000
Monthly payment£85.00£90
No of payments60111
Total repaid£5,100£10,000
Possible IVA cash saving (£)£10,000
Possible IVA time saving (months)51


IVA and Debt Management Plan affects credit rating, rebuilding your credit history back can only be achieved faster with Individual Voluntary Agreement.

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