IVA or DMP: Is an IVA or Debt Management Plan Better?
Facing insolvency can be a challenge on many levels, not only financially. With a range of options available for managing debt, it can be confusing to know which insolvency solution to choose, IVA? Debt management? Pros and cons can circle in an already distressed mind. Professional insolvency specialists like Irwin Insolvency can help take the confusion out of choosing your route out of debt.
While there are definite advantages to individual voluntary arrangements (IVA), you may be undecided and wondering can I change from IVA to debt management?
Can I Change from IVA to Debt Management?
Taking on an IVA is a legally binding responsibility that offers great benefits to the person in debt, while also offering a fair outcome to creditors. Changing from an IVA to a debt management plan is a change to a less formal agreement with generally a longer route out of debt, and a commitment to repaying the debt in full. Added to that is the reality that once you cancel your IVA, you no longer have the legal protection it affords, which means your creditors can contact you, they can take legal action against you, and they may unfreeze the interest and charges that were legally frozen at the start of your IVA.
If you are asking can I change from IVA to Debt Management? It may be prudent to ask yourself (and your insolvency practitioner) what you stand to gain from stopping your IVA. Debt management has many factors to consider before making the change.
Is an IVA or Debt Management Plan Better?
Everyone will have personal factors to consider in choosing an insolvency solution. Whether an IVA or debt management plan is better for you will depend largely on the following considerations:
- How quickly you want to be out of debt. IVAs generally last five to six years, whereas DMPs could last up to ten years.
- Do you meet the criteria to qualify for an IVA? It’s more difficult to get an IVA than a DMP.
- Are you committed to repaying all the debt? One factor with an IVA is that the remainder of the debt is written off at the completion of the Debt management plans on the other hand require the complete repayment of debt.
- Is asset protection a priority for you? Under an IVA your assets are generally protected from creditors. This is not necessarily the case with a DMP.
- Peace of mind. Under an IVA, you have much greater legal protection than under a DMP. While your creditors may agree to freeze interest and charges under a debt management plan, they’re not legally required to do so. Changing from an IVA to a DMP could mean you find yourself with a greater debt than you started with.
How Can Irwin Insolvency Take the Confusion out of Your IVA Debt Management Decision?
Irwin Insolvency has a team of professional insolvency experts who can help you understand and plan for all contingencies in your debt solution – such as individual voluntary arrangements. Contact Irwin Insolvency for a calmer journey to solvency.