IVA v/s Debt Management Plan

Which is the best option for you to clear your debts – (DMP) Debt Management Plan or (IVA) Individual Voluntary Arrangement? The major difference in between DMP and IVA is that Debt Management Plan is totally informal whereas Individual Voluntary Plan is an official binding arrangement. The requirements for IVA and debt management plan differ a lot. In former the debt should be no less than £15,000 whereas in DMP the debt should be no less than £2,000. In the former the debtor should be capable making a monthly payment of about £200, whereas in the DMP he should be capable making a monthly payment of about £100.

In IVA, a creditors meeting is necessary but there is no such meeting in case of debt management plan. The debtor must have at least two debts in DMP, but in case of individual voluntary arrangement, the debtor must have no less than three debts and all the creditors should be different. In IVA the credit rating of the debtor gets affected but this is not so in DMP. There is payment flexibility in DMP, but in an IVA the debtor has to pay the agreed amount every month. One thing is common in both, i.e. that the debtor should have regular income.