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Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
A debt management plan (DMP) and an Individual Voluntary Arrangement (IVA) both help you repay unsecured debt through a single affordable monthly payment, but they work in very different ways. A DMP is informal: no court or legal process is involved, and any creditor can decline to take part or pull out later. An IVA is a formal insolvency procedure, agreed through an insolvency practitioner and approved by your creditors as a group, which then legally binds every creditor included in it.
How do a DMP and an IVA differ in practice?
| Debt management plan | IVA | |
|---|---|---|
| Legal status | Informal, no legal protection | Formal insolvency procedure |
| Who arranges it | A debt charity or commercial provider | A licensed insolvency practitioner |
| Creditors bound once agreed | No, each decides individually | Yes, once approved by the required majority |
| Typical length | Until debts are repaid in full, no fixed term | Usually a set period, often 5 to 6 years |
| What happens to remaining debt at the end | Continues until fully repaid | Any remaining unpaid balance is usually written off |
| Credit file record | Not the plan itself, but individual account markers | Recorded for 6 years from the start date |
| Can you leave it? | Yes, at any time | Only by failing it or through a formal process |
| Cost | Free or fee-charging, depending on provider | Usually includes fees built into the monthly payment |
Both are aimed at unsecured debts such as credit cards, loans, overdrafts and catalogue accounts, and neither is generally used to deal with your mortgage directly.
Why does the legal status matter?
Because a DMP has no legal backing, a creditor who isn’t happy with the reduced payment can refuse to accept it, continue charging interest, or in some cases start court action, including a CCJ, even while you’re making DMP payments to everyone else. An IVA removes that risk for included debts once it’s approved: creditors bound into the arrangement can’t take further action to recover the debt while you keep to the terms.
This protection is one reason people move from a DMP to an IVA when a DMP isn’t working, for example if creditors keep chasing despite payments being made, or if the debt is too large to clear within a reasonable time on a DMP.
Why does the write-off at the end matter?
An IVA is designed to end with a clean outcome: once you’ve completed the agreed payments, usually over 5 to 6 years, any remaining balance on the included debts is written off, and you’re no longer liable for it. A DMP has no such mechanism. It continues at whatever payment you can afford until the debts are repaid in full, which can take considerably longer if the payment is small relative to the total owed. Our guide on how long a debt management plan lasts explains what can extend that further.
Which shows up differently on a credit file?
An IVA is recorded on your credit file for 6 years from the date it started, even if you complete it early, and it’s also listed on the Insolvency Register while it runs and for 3 months after. A DMP isn’t recorded as a named entry at all. What can show instead are the markers on each individual account, such as missed payments, defaults, or arrangement to pay entries, which follow their own 6-year rules separately from the plan itself. Our guides on what is a debt management plan and does a DMP affect your credit score cover that in more depth, and how long an IVA stays on your credit file covers the IVA side.
Does either affect your home directly?
Neither a DMP nor an IVA puts your mortgage debt itself into the arrangement, since both usually deal with unsecured debt only. However, many IVAs include a clause requiring you to try to release equity from your home towards the end of the arrangement, often in the final 6 months, and check with your IVA supervisor before assuming what applies to yours. A DMP has no equivalent clause, since it isn’t a formal legal arrangement with fixed terms in the same way.
What it means for a homeowner who wants to remortgage
Which arrangement you’re on, or have completed, changes what a lender or adviser will ask about. An IVA is something you’ll usually need to declare on a mortgage application, and its start date, status and any equity release clause will matter. Our page on remortgaging after an IVA and our guide on what happens to your home in an IVA explain what’s typically involved, including during an active arrangement.
A DMP works differently, since there’s no formal record to declare, but the underlying account markers and your ongoing monthly payment (a committed outgoing) still matter to affordability and credit history. Our page on remortgaging with a debt management plan covers that side. Whichever you’re on, if a remortgage would be used to consolidate the remaining debt in one go, that turns unsecured debt into debt secured against your home, which our debt consolidation remortgage page explains in full.
Deciding between the two
Neither option is right for everyone, and choosing between a DMP and an IVA depends on the size of your debts, your income, and how quickly you need creditors to stop chasing you. A regulated debt adviser can look at your full circumstances and explain which options you’re likely to be eligible for. Free, impartial advice is available from MoneyHelper, StepChange and National Debtline, and it’s worth speaking to one of them before committing to either route or paying a fee to a provider.
Frequently asked questions
Is a DMP or an IVA better for a mortgage?
Neither is automatically better. An IVA is a formal insolvency and lenders will ask about it directly, while a DMP is informal and won't show as a labelled entry, though the underlying account markers can affect your file either way. It depends on your own circumstances, and a broker or adviser can look at your full picture.
Can I switch from a DMP to an IVA?
Yes, this is fairly common if a DMP payment becomes unaffordable or debts aren't clearing quickly enough. A debt adviser or insolvency practitioner can assess whether an IVA would suit your situation better, including whether your debts and income meet the usual criteria.
Does an IVA write off more debt than a DMP?
Often, yes, since an IVA is designed to end with any remaining unpaid balance written off, usually after 5 to 6 years. A DMP is intended to repay debts in full eventually, though how long that takes depends entirely on your payment and total debt.
Which stays on my credit file longer, a DMP or an IVA?
An IVA is recorded for 6 years from its start date, even if it finishes early. A DMP itself isn't recorded, but the accounts within it can carry markers, such as defaults, that also last 6 years from when each was registered, which may run for longer or shorter than the DMP itself.