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Can I change from a DMP to an IVA?

Posted 14 November 2019

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Changing from a DMP to an IVA might be possible, but there’s a lot to think about before going ahead with it.

When you are on a Debt Management Plan, the unsecured debts included in it are repaid at the lower rate agreed. This means you can afford your regular repayments, whilst still having enough money to live on. It will take longer to clear your debts, but when you complete your plan you will have repaid them in full.

So why might you want to change to something else? DMPs are a great way to get back on top of your finances, but there are other debt solutions available. One of the most popular alternatives is the Individual Voluntary Arrangement, also known as an IVA.

Is the grass greener on an IVA?

It’s a short list - but when considering a change from a DMP to an IVA it’s worth noting the similarities first:

  • • You make a regular payment toward the debts included in your plan, that’s affordable for you. You’ll have the peace of mind knowing that you’ll have enough money to live on and keep up with your priority bills.
  • • Your interest and charges are typically frozen with your lenders - with an IVA that’s guaranteed, with a DMP it isn’t but lenders will usually do so.

 

There are some key differences which might make an IVA more suitable  for you. Listing all those differences you would need a completely separate blog - so it’s a good thing we have already written one for you here.

And (because we’re an extra helpful bunch) we’ve also got a blog which compares a DMP and an IVA to help you think about which might be more suitable for you.

So, can you change from a DMP to an IVA?

The short answer is: yes, it is possible to switch from a DMP to an IVA. But the long answer is - whether it is a good idea will really depend on your situation.

When you are comparing debt solutions you need to consider a whole bunch of things like:

  • • Whether insolvency will impact on your job (or a job you want to do in future)
  • • If you think your circumstances might improve over the next few years
  • • If it’s important to you to repay your debts in full, or if you would be happy for some of your debts to be written off by your lenders
  • • How much you can realistically afford to pay each month
  • If you are a homeowner and, if you are, how much equity you have in your property

 

How can I change from a DMP to an IVA?

Starting the ball rolling on this one is quite straightforward:

dmp-to-iva

  • • Have a think about why you might want to change from a DMP to an IVA. If it helps, write your top reasons down.
  • • Do as much research as you can. This will give you a well rounded view of your options before you take any further steps.
  • • Once you’ve got your reasons for wanting to change from a DMP to an IVA - and you’ve done as much research as possible into the matter - give your DMP provider a call to see what can be done.

 

Something important to keep in mind

It’s important to remember that everyone’s situation is different. What might be possible for one person might not be possible for you. So, definitely research and get a good idea of what you want, but allow some flexibility based on what your provider advises you. After all, they are the experts and have your best interest in mind!

 

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.