IVA: Compared with Debt Solutions

It may be hard to determine which debt solution is more suitable for you, options such as IVAs and Debt Management Plans can both help you become free of debt... Here are the major differences and benefits of both:

How does a Debt Management plan work and whats the difference between that and an IVA?

The main difference is that the Individual Voluntary Agreement is legally binding whereas the debt management plan is not. The principle that governs both debt solutions is the same – both allow debtors to make arrangements with their creditors in hopes of paying off their debt.
The most important difference between the IVA and a debt management plan is that once you have completed your IVA successfully, all outstanding balances will be written off completely.
A debt management plan on the other hand, will only allow you to pay off your debt in manageable amounts and will not allow you to write off any amount you cannot afford.
An Individual Voluntary Agreement is a legally binding agreement and, by law, will freeze any interest charges on your current debt. This is probably the biggest advantage of an IVA over an ordinary debt management plan; when you use an IVA, you will essentially know where you stand financially, and you will have the protection of the court against creditors who may change their minds midway into your agreement.
A non binding agreement, such as a debt management plan, can mean that your creditors have the freedom to change their minds at any given time.

The length of time needed to complete both debt solutions also vary.

IVAs last for up to five years whereas a debt management plan can take you longer to pay off all your debt.

There are advantages and disadvantages to both an IVA and a debt management plan; however, the choice of which debt solution to use depends on your current financial situation.

An IVA is generally only available for individuals who have incurred a minimum amount of £15,000 in unsecured debt. If you meet this level, chances are an IVA is your best option.

You do need to make sure that the option you are considering to choose will work best for you.

You can consult an expert on debt management plans and IVAs to have yourself assessed; these specialists can help you in determining which option is best suited to help you clear yourself of debt.