Whole books have been written on this subject, but in brief:-
An IVA is a formal insolvency appointment supervised by a professional suitably qualified for such purpose. IVAs are a legal, contractual arrangement between debtor and creditors which cannot be amended once accepted unless with the agreement of both parties. The agreement sets the terms of the IVA - to be payments by monthly instalments, or the realisation of assets or a combination of both, over a formal set time period during which creditors cannot continue to charge interest or take enforcement action against the debtor. At the end of the agreement, the debtor is formall released from any balances owing.
A DMP is an informal agreement between debtor and creditors which has no basis in law, or affords any protection to the debtor from the ongoing actions of creditors. Notwithstanding this lack of certainty, a lot of creditors are currently accepting DMPs and freezing interest, and I suspect that we will see growth in this industry over the next couple of years.
Regards, Melanie Giles, Insolvency Practitioner
