I am by no means an expert but i will try to explain-then I imagine Foggy will come along and be most helpful
i have completed an IVA and have been here nearly 8 years so reading posts on here will really help you understand what an IVA is and what your responsibilities are etc.
However, I’ll try to simplify.
A DMP, i dont believe, is legally binding. Its good for lower debt levels, More an informal agreement between you amd the creditors but you are required to repay every last penny. Over an unspecified time frame. This could be >10 years if high debt amd low repayment. Credit rating would be shot and you wouldnt be able to use the credit cards etc as i would assume theyd be frozen. As it is an informal arrangement it could be cancelles at any point amd you left to repay immediately.
An IVA is legally binding. A lot of work (should) go into it to find out wjat your disposable income is (this is established from your income minus allowable expenses-council tax, rent/mortgage, utilities, Food, petrol, phone, Clothes, Health costs) The disppsable income is whats left after your allowances are deducted and becomes your IVA monthly payment.
This is reviewed annually or if there is a change with your income/outgoings,it could go up if you earn more and you also pay in a proportion of overtime and any ‘windfalls’ over £500.
It is set usually at 60 months. Companies chsrge fees to setup/run your IVA which come out of whats paid in by you (not additional). you will always owe the full amount of debt but may not pay it all back over those 60 months however the aim will be to pay back as much as you can afford hence why overtime and windfalls are additional to your disposable income payment. So a lottery win or inheritance will be captured by the IVA.
again credit rating will be shot and you wont have credit cards loans or overdraft but it is for a set time frame and legally binding meaning companies are tied in and have to comply (as well as yourself) onthey cant send in bailiffs or request more from you.
If you are a property owner theres more to add to this but gets complicated then-find posts about equity release!
I hope that helps.
DMP-informal arramgement over X amount of years until paid back all of debt -best for lower debt amounts, less restictive.
IVA- legally binding for 5-6 years. Good for higher levels of debt. Some people find them very Restrictive and struggle with the requirements, but do help you budget and gain financial control. Annual reciews.