Debt Management Plans, IVAs and Bankruptcy: What's the Difference?

Every April, the financial landscape shifts slightly. The Personal Allowance stays the same, bills go up, wages tick higher, and you're left wondering what it all means for your bank account. As of 16 April 2026, several significant changes are now in effect, and some of them are genuinely good news. Others, not so much. We've broken down every change that matters and what you should actually do about it.

Does the Personal Allowance mean I pay less tax this year?

No. The Personal Allowance, which is the amount you can earn before income tax kicks in, remains frozen at £12,570. This isn't new, but it's worth highlighting because it means your tax band hasn't moved, even if your salary has.

Here's the real impact: if you got a pay rise this year, more of that money goes to the taxman. The government extended this freeze through to April 2031, so this is now official policy for the foreseeable future. It's a slow-motion tax rise that creeps up on you if you're earning above minimum wage.

If you've had a pay rise above inflation, you might notice more tax coming out without realizing why.

How much more am I earning on the National Living Wage?

If you're a full-time worker on the National Living Wage (NLW), your hourly rate went up to £12.71 this month, a 4% rise from the previous rate. Over a full year of 35-hour weeks, that adds about £900 more to your pocket before tax.

There's a bigger story for younger workers. If you're 18-20 years old, your minimum wage jumped 8.5%, which is almost double the general increase. Apprentices and under-18s also saw their rates rise, though not quite as generously.

The catch? This boost will likely be eaten into by that frozen Personal Allowance we just mentioned. Also, if your employer's wages bill just increased, they might not be hiring as many new staff this quarter.

Will my energy bills be cheaper this summer?

Yes, and this is genuinely the best news of the month. The energy price cap dropped to £1,641 for the April-June quarter, a 7% decrease from the previous cap. For a typical household, that means lower bills when the warmer months arrive.

However, don't pop the champagne just yet. This relief is temporary and seasonal. Energy prices haven't fundamentally stabilized, and we're heading into the warmer months when you use less heating anyway. Come autumn, bills could climb again. But for now, enjoy the breathing room on your energy costs.

A 7% drop sounds modest, but on bills averaging £1,641, that's real money back in your pocket.

How much have my council tax and water bills gone up?

Council tax is climbing. Most councils have raised their bills by around 5%, meaning the average Band D property now pays £2,392 per year. That's not a huge absolute increase year on year, but it adds up over time, especially if you're already stretched.

Water companies have also increased charges. Most households will see bills rise by around 5.4%, adding roughly £33 per year to your bill. It's not enormous in the grand scheme, but these small increases compound across all your utilities.

If you're on a tight budget, request a Council Tax Reduction if you think you qualify. Many councils have different thresholds. It's worth asking even if you think you won't be eligible, because the rules vary by location.

What's changed with Universal Credit and benefits?

If you're on Universal Credit, the standard allowance went up by 6.2% from April. This is a meaningful increase and reflects the cost of living pressures many people face.

There's also major news: the two-child limit has been removed. Families can now claim support for all their children. If you have more than two children and have been affected by this limit, this is a significant change that could increase your Universal Credit payments.

The removal of the two-child limit means families have been waiting years for this policy change.

Are prescription prices going up again?

No. The prescription charge has been frozen at under £10 per item. If you use multiple medications regularly, an annual prescription exemption might save you money, so it's worth reviewing your options.

This is one of the few places where costs aren't rising. Cherish it, because it won't last forever.

What's changed with Inheritance Tax and business assets?

If you own a business or agricultural assets, there's a significant change. Business and agricultural property now have Inheritance Tax (IHT) relief structured in two tiers. On the first £2.5 million of assets, you get full relief. Above that, the relief drops to 50%.

For most small and medium business owners, this means your entire business passes to your heirs without an IHT bill. Only if you have very substantial assets does the 50% relief above £2.5m kick in.

Has my ISA allowance changed?

No. Your ISA allowance remains at £20,000 per tax year. That's the total you can save across all ISAs without paying tax on the interest or growth.

If you haven't used your full allowance yet this tax year, you still have until early July to do so. It's a tax-efficient way to save, especially if interest rates have ticked up on savings accounts.

Where Mona Fits

Making sense of tax changes and budget shifts can feel overwhelming. Mona helps you understand what these changes mean for your specific situation and work through a practical plan to manage them. Whether you're figuring out how a pay rise will actually affect your take-home pay after tax, or working out how to adjust your budget for higher council tax and lower energy costs, Mona guides you through the numbers without judgment or jargon.

The Bottom Line

April 2026 brought a mix of wins and losses. Energy bills dropped, wages rose, and Universal Credit got more generous. But council tax, water bills, and the frozen Personal Allowance are slowly eroding those gains. The key is knowing which changes affect you most and adjusting your budget accordingly.

Start with Mona today.

Information correct as of 16 April 2026. For regulated financial guidance, visit MoneyHelper.org.uk.When personal debts spiral beyond control, formal solutions exist - but they’re not all equal. A Debt Management Plan is negotiation; an IVA is a legal agreement; bankruptcy is a last resort. Each has different impacts on your credit file, your life, and your future. Understanding what each actually is - not just the name - is the first step to choosing the right path.

What exactly is a Debt Management Plan (DMP)?

A DMP is an informal agreement between you and your creditors where you propose reduced payments based on what you can realistically afford. It’s not a legal arrangement - creditors aren’t obligated to accept it. But in practice, most do, especially if you’re working with a debt adviser who presents a realistic budget and demonstrates genuine hardship.

With a DMP, you make one payment to a debt adviser (or directly to creditors, depending on the setup) who distributes it proportionally across your debts. If you owe £2,000 to one creditor and £3,000 to another, they receive roughly 40% and 60% of your payment. You might pay £150 total instead of £400, as long as you’re genuinely unable to afford more.

The key: it’s informal, flexible, and reversible. If your situation improves and you can pay more, you increase payments. If circumstances get worse, you can adjust the plan. You’re not locked into anything permanent.

What are the pros and cons of a Debt Management Plan?

Pros: it’s simple to set up, it’s free through charities like StepChange, it doesn’t require a legal process, and creditors usually stop chasing you aggressively once the arrangement is in place. You keep control of your finances - you’re still paying back what you owe, just less each month. If your income improves, you can increase payments and clear debt faster.

Cons: a DMP will show on your credit file as a ‘debt arrangement’ which affects future borrowing. Interest might continue to accrue unless you negotiate with individual creditors to freeze it. Some creditors might not accept the plan and could still pursue you. If you miss payments on the DMP itself, creditors can restart collection action. The plan only ends when you’ve paid everything - which could take 5-10 years.

A DMP doesn’t write off any debt - you’re still responsible for the full amount. It’s a breathing strategy, not a solution.

What is an Individual Voluntary Arrangement (IVA)?

An IVA is a formal, legal agreement between you and your creditors, arranged through an insolvency practitioner. You propose a repayment plan (usually over 5-6 years) and creditors vote on whether to accept it. If 75% (by debt value) agree, all creditors are bound by it - even the ones who voted against it.

With an IVA, you typically pay a fixed amount each month for a fixed period. When it ends, any remaining debt is written off - that’s the crucial difference from a DMP. You might owe £40,000 across five creditors, propose paying £250 monthly for five years (totalling £15,000), and if creditors agree, the remaining £25,000 is forgiven when the IVA ends.

An IVA is a legal, formal process. Missing a payment can breach the agreement and end it, returning you to the original debts. But if you stick to it, you get genuine relief at the end.

What are the pros and cons of an IVA?

Pros: debt is genuinely written off at the end - you don’t pay back everything you owe. The amount is determined by your ability to pay, not by what creditors demand. Once in place, creditors must stop pursuing you. It’s legally binding on all creditors, so you don’t have to negotiate separately. It protects you from court action, wage garnishment, and bailiffs.

Cons: an IVA is recorded on your credit file for six years, severely damaging your credit score. You’ll struggle to get credit, mortgages, or loans during that time and for years afterward. The insolvency practitioner charges fees (usually £5,000-£10,000 total, paid from your monthly contributions). You’re legally obliged to disclose the IVA to employers and on financial applications. If your financial situation improves significantly (like an inheritance or bonus), you might be required to increase payments. Breaking an IVA has serious consequences.

What is bankruptcy and how does it differ from an IVA?

Bankruptcy is a formal legal process where a court declares you unable to pay your debts. Your assets are investigated and non-essential property might be sold to repay creditors. Unsecured debts like credit cards and personal loans are written off entirely, though secured debts like mortgages remain.

Bankruptcy is quicker than an IVA - it typically lasts 12 months for a standard bankruptcy, though your credit file shows it for six years. It’s automatic debt discharge: you’re legally freed from most debts after the bankruptcy period ends. An IVA requires you to make payments for 5-6 years; bankruptcy writes off debt immediately.

There’s also a Debt Relief Order (DRO), which is bankruptcy’s gentler cousin. If your debts are under £20,000 and you own minimal assets, a DRO might be available. It costs £90, lasts just three years, and writes off all qualifying debt. It’s bankruptcy-lite.

When is each option actually appropriate?

A DMP works if you have a realistic income to repay debts over time, even slowly. You owe £8,000 across three creditors but earn £1,800 monthly with genuine commitments - a DMP lets you pay £100-150 monthly and gradually clear it. No court involvement, minimal impact on your future life.

An IVA makes sense when you owe more debt than you can realistically repay in full, but you have enough income to make meaningful payments. You owe £30,000, earn £2,000 monthly with expenses of £1,500 - you can spare £500 monthly. An IVA lets you pay that for five years, then the remaining £5,000 is written off. Without an IVA, you’d be paying for decades or defaulting.

Bankruptcy is appropriate when you genuinely have little income and substantial assets (like a house with equity) that need to be dealt with, or when you owe far more than you could ever repay and have no meaningful income. It’s also appropriate if an IVA isn’t available (creditors reject your proposal) and you need legal protection.

A DRO is for people with low income, minimal assets, and debts under £20,000. It’s the simplest route if you qualify.

How do these options affect your credit file and future borrowing?

A DMP shows as a ‘debt arrangement’ on your credit file while it’s active. Future lenders see you’re in difficulty. Once it ends, the notation stays for six years from the date it was recorded, gradually damaging your credit score less as time passes.

An IVA is recorded as an insolvency arrangement and stays on your file for six years from the date it started. It’s more damaging than a DMP because it’s formal insolvency. Mortgages and significant credit are nearly impossible during this time. After six years, it comes off your file, but the damage lingers in lenders’ eyes.

Bankruptcy similarly appears for six years and is heavily damaging. Mortgages are extremely difficult within five years of discharge. After six years, the bankruptcy notation comes off your file, though some lenders will still ask about it in applications and might decline you.

None of these options destroys your credit permanently - but they all make borrowing harder for several years afterward.

What fees and costs are involved?

A DMP through a charity like StepChange is free - they’re funded by creditors and donations. Some commercial debt providers charge fees, which is usually a red flag. Stick with free, charity-backed arrangements.

An IVA requires an insolvency practitioner, and they’ll charge fees (typically £5,000-£10,000). These fees are paid from your monthly contributions before money goes to creditors, so they extend the IVA or reduce what you’re paying each month.

A DRO costs £90 (a court fee). Bankruptcy involves court fees (roughly £130-£680 depending on the route) plus potential costs if you have assets to liquidate. Some of these can be waived if you’re in genuine hardship.

How long does each option take to clear your name?

A DMP ends when you’ve paid back all your debts - typically 5-10+ years depending on how much you owe and how much you can afford to pay. During that time, you’re in active debt repayment, though creditors have stopped aggressive collection.

An IVA typically lasts 5-6 years. On completion, debts are written off and the legal arrangement ends. Your credit file continues to show the IVA history for six years from when it started (so up to 11-12 years total), but the active obligation is finished after 5-6 years.

A DRO lasts three years. After that, qualifying debts are written off and the DRO ends. Your credit file shows it for six years from start, but the active restriction is only three years.

Bankruptcy typically lasts 12 months. Once discharged, you’re freed from the debts. The bankruptcy notation stays on your credit file for six years, but the legal status is resolved after 12 months.

Where Mona Fits

Mona helps you understand and compare borrowing options so you can avoid reaching these formal solutions in the first place. But if you do face serious debt, knowing the differences between DMP, IVA, and bankruptcy is crucial. Mona can’t arrange these - you’ll need free debt advice - but understanding your options helps you make informed decisions about your financial future.

The Bottom Line

A Debt Management Plan is negotiation: you propose reduced payments and creditors usually accept it. An IVA is a formal legal agreement where you commit to fixed payments over 5-6 years and remaining debt is written off. Bankruptcy is full legal discharge but with more severe consequences. Each affects your credit file for six years, but they offer different paths to recovery. If you’re drowning in debt, get free advice from StepChange or Citizens Advice - they’ll help you understand which option is genuinely right for your situation.

Don’t attempt these alone - speak to a free debt adviser before deciding.

For free debt advice, contact StepChange (stepchange.org) or Citizens Advice (citizensadvice.org.uk). For information on formal insolvency options, visit MoneyHelper.org.uk.

Join Mona’s early access waitlist

Join the waitlist

All articles

Debt Management Plans, IVAs and Bankruptcy: What's the Difference?

Every April, the financial landscape shifts slightly. The Personal Allowance stays the same, bills go up, wages tick higher, and you're left wondering what it all means for your bank account. As of 16 April 2026, several significant changes are now in effect, and some of them are genuinely good news. Others, not so much. We've broken down every change that matters and what you should actually do about it.

Does the Personal Allowance mean I pay less tax this year?

No. The Personal Allowance, which is the amount you can earn before income tax kicks in, remains frozen at £12,570. This isn't new, but it's worth highlighting because it means your tax band hasn't moved, even if your salary has.

Here's the real impact: if you got a pay rise this year, more of that money goes to the taxman. The government extended this freeze through to April 2031, so this is now official policy for the foreseeable future. It's a slow-motion tax rise that creeps up on you if you're earning above minimum wage.

If you've had a pay rise above inflation, you might notice more tax coming out without realizing why.

How much more am I earning on the National Living Wage?

If you're a full-time worker on the National Living Wage (NLW), your hourly rate went up to £12.71 this month, a 4% rise from the previous rate. Over a full year of 35-hour weeks, that adds about £900 more to your pocket before tax.

There's a bigger story for younger workers. If you're 18-20 years old, your minimum wage jumped 8.5%, which is almost double the general increase. Apprentices and under-18s also saw their rates rise, though not quite as generously.

The catch? This boost will likely be eaten into by that frozen Personal Allowance we just mentioned. Also, if your employer's wages bill just increased, they might not be hiring as many new staff this quarter.

Will my energy bills be cheaper this summer?

Yes, and this is genuinely the best news of the month. The energy price cap dropped to £1,641 for the April-June quarter, a 7% decrease from the previous cap. For a typical household, that means lower bills when the warmer months arrive.

However, don't pop the champagne just yet. This relief is temporary and seasonal. Energy prices haven't fundamentally stabilized, and we're heading into the warmer months when you use less heating anyway. Come autumn, bills could climb again. But for now, enjoy the breathing room on your energy costs.

A 7% drop sounds modest, but on bills averaging £1,641, that's real money back in your pocket.

How much have my council tax and water bills gone up?

Council tax is climbing. Most councils have raised their bills by around 5%, meaning the average Band D property now pays £2,392 per year. That's not a huge absolute increase year on year, but it adds up over time, especially if you're already stretched.

Water companies have also increased charges. Most households will see bills rise by around 5.4%, adding roughly £33 per year to your bill. It's not enormous in the grand scheme, but these small increases compound across all your utilities.

If you're on a tight budget, request a Council Tax Reduction if you think you qualify. Many councils have different thresholds. It's worth asking even if you think you won't be eligible, because the rules vary by location.

What's changed with Universal Credit and benefits?

If you're on Universal Credit, the standard allowance went up by 6.2% from April. This is a meaningful increase and reflects the cost of living pressures many people face.

There's also major news: the two-child limit has been removed. Families can now claim support for all their children. If you have more than two children and have been affected by this limit, this is a significant change that could increase your Universal Credit payments.

The removal of the two-child limit means families have been waiting years for this policy change.

Are prescription prices going up again?

No. The prescription charge has been frozen at under £10 per item. If you use multiple medications regularly, an annual prescription exemption might save you money, so it's worth reviewing your options.

This is one of the few places where costs aren't rising. Cherish it, because it won't last forever.

What's changed with Inheritance Tax and business assets?

If you own a business or agricultural assets, there's a significant change. Business and agricultural property now have Inheritance Tax (IHT) relief structured in two tiers. On the first £2.5 million of assets, you get full relief. Above that, the relief drops to 50%.

For most small and medium business owners, this means your entire business passes to your heirs without an IHT bill. Only if you have very substantial assets does the 50% relief above £2.5m kick in.

Has my ISA allowance changed?

No. Your ISA allowance remains at £20,000 per tax year. That's the total you can save across all ISAs without paying tax on the interest or growth.

If you haven't used your full allowance yet this tax year, you still have until early July to do so. It's a tax-efficient way to save, especially if interest rates have ticked up on savings accounts.

Where Mona Fits

Making sense of tax changes and budget shifts can feel overwhelming. Mona helps you understand what these changes mean for your specific situation and work through a practical plan to manage them. Whether you're figuring out how a pay rise will actually affect your take-home pay after tax, or working out how to adjust your budget for higher council tax and lower energy costs, Mona guides you through the numbers without judgment or jargon.

The Bottom Line

April 2026 brought a mix of wins and losses. Energy bills dropped, wages rose, and Universal Credit got more generous. But council tax, water bills, and the frozen Personal Allowance are slowly eroding those gains. The key is knowing which changes affect you most and adjusting your budget accordingly.

Start with Mona today.

Information correct as of 16 April 2026. For regulated financial guidance, visit MoneyHelper.org.uk.When personal debts spiral beyond control, formal solutions exist - but they’re not all equal. A Debt Management Plan is negotiation; an IVA is a legal agreement; bankruptcy is a last resort. Each has different impacts on your credit file, your life, and your future. Understanding what each actually is - not just the name - is the first step to choosing the right path.

What exactly is a Debt Management Plan (DMP)?

A DMP is an informal agreement between you and your creditors where you propose reduced payments based on what you can realistically afford. It’s not a legal arrangement - creditors aren’t obligated to accept it. But in practice, most do, especially if you’re working with a debt adviser who presents a realistic budget and demonstrates genuine hardship.

With a DMP, you make one payment to a debt adviser (or directly to creditors, depending on the setup) who distributes it proportionally across your debts. If you owe £2,000 to one creditor and £3,000 to another, they receive roughly 40% and 60% of your payment. You might pay £150 total instead of £400, as long as you’re genuinely unable to afford more.

The key: it’s informal, flexible, and reversible. If your situation improves and you can pay more, you increase payments. If circumstances get worse, you can adjust the plan. You’re not locked into anything permanent.

What are the pros and cons of a Debt Management Plan?

Pros: it’s simple to set up, it’s free through charities like StepChange, it doesn’t require a legal process, and creditors usually stop chasing you aggressively once the arrangement is in place. You keep control of your finances - you’re still paying back what you owe, just less each month. If your income improves, you can increase payments and clear debt faster.

Cons: a DMP will show on your credit file as a ‘debt arrangement’ which affects future borrowing. Interest might continue to accrue unless you negotiate with individual creditors to freeze it. Some creditors might not accept the plan and could still pursue you. If you miss payments on the DMP itself, creditors can restart collection action. The plan only ends when you’ve paid everything - which could take 5-10 years.

A DMP doesn’t write off any debt - you’re still responsible for the full amount. It’s a breathing strategy, not a solution.

What is an Individual Voluntary Arrangement (IVA)?

An IVA is a formal, legal agreement between you and your creditors, arranged through an insolvency practitioner. You propose a repayment plan (usually over 5-6 years) and creditors vote on whether to accept it. If 75% (by debt value) agree, all creditors are bound by it - even the ones who voted against it.

With an IVA, you typically pay a fixed amount each month for a fixed period. When it ends, any remaining debt is written off - that’s the crucial difference from a DMP. You might owe £40,000 across five creditors, propose paying £250 monthly for five years (totalling £15,000), and if creditors agree, the remaining £25,000 is forgiven when the IVA ends.

An IVA is a legal, formal process. Missing a payment can breach the agreement and end it, returning you to the original debts. But if you stick to it, you get genuine relief at the end.

What are the pros and cons of an IVA?

Pros: debt is genuinely written off at the end - you don’t pay back everything you owe. The amount is determined by your ability to pay, not by what creditors demand. Once in place, creditors must stop pursuing you. It’s legally binding on all creditors, so you don’t have to negotiate separately. It protects you from court action, wage garnishment, and bailiffs.

Cons: an IVA is recorded on your credit file for six years, severely damaging your credit score. You’ll struggle to get credit, mortgages, or loans during that time and for years afterward. The insolvency practitioner charges fees (usually £5,000-£10,000 total, paid from your monthly contributions). You’re legally obliged to disclose the IVA to employers and on financial applications. If your financial situation improves significantly (like an inheritance or bonus), you might be required to increase payments. Breaking an IVA has serious consequences.

What is bankruptcy and how does it differ from an IVA?

Bankruptcy is a formal legal process where a court declares you unable to pay your debts. Your assets are investigated and non-essential property might be sold to repay creditors. Unsecured debts like credit cards and personal loans are written off entirely, though secured debts like mortgages remain.

Bankruptcy is quicker than an IVA - it typically lasts 12 months for a standard bankruptcy, though your credit file shows it for six years. It’s automatic debt discharge: you’re legally freed from most debts after the bankruptcy period ends. An IVA requires you to make payments for 5-6 years; bankruptcy writes off debt immediately.

There’s also a Debt Relief Order (DRO), which is bankruptcy’s gentler cousin. If your debts are under £20,000 and you own minimal assets, a DRO might be available. It costs £90, lasts just three years, and writes off all qualifying debt. It’s bankruptcy-lite.

When is each option actually appropriate?

A DMP works if you have a realistic income to repay debts over time, even slowly. You owe £8,000 across three creditors but earn £1,800 monthly with genuine commitments - a DMP lets you pay £100-150 monthly and gradually clear it. No court involvement, minimal impact on your future life.

An IVA makes sense when you owe more debt than you can realistically repay in full, but you have enough income to make meaningful payments. You owe £30,000, earn £2,000 monthly with expenses of £1,500 - you can spare £500 monthly. An IVA lets you pay that for five years, then the remaining £5,000 is written off. Without an IVA, you’d be paying for decades or defaulting.

Bankruptcy is appropriate when you genuinely have little income and substantial assets (like a house with equity) that need to be dealt with, or when you owe far more than you could ever repay and have no meaningful income. It’s also appropriate if an IVA isn’t available (creditors reject your proposal) and you need legal protection.

A DRO is for people with low income, minimal assets, and debts under £20,000. It’s the simplest route if you qualify.

How do these options affect your credit file and future borrowing?

A DMP shows as a ‘debt arrangement’ on your credit file while it’s active. Future lenders see you’re in difficulty. Once it ends, the notation stays for six years from the date it was recorded, gradually damaging your credit score less as time passes.

An IVA is recorded as an insolvency arrangement and stays on your file for six years from the date it started. It’s more damaging than a DMP because it’s formal insolvency. Mortgages and significant credit are nearly impossible during this time. After six years, it comes off your file, but the damage lingers in lenders’ eyes.

Bankruptcy similarly appears for six years and is heavily damaging. Mortgages are extremely difficult within five years of discharge. After six years, the bankruptcy notation comes off your file, though some lenders will still ask about it in applications and might decline you.

None of these options destroys your credit permanently - but they all make borrowing harder for several years afterward.

What fees and costs are involved?

A DMP through a charity like StepChange is free - they’re funded by creditors and donations. Some commercial debt providers charge fees, which is usually a red flag. Stick with free, charity-backed arrangements.

An IVA requires an insolvency practitioner, and they’ll charge fees (typically £5,000-£10,000). These fees are paid from your monthly contributions before money goes to creditors, so they extend the IVA or reduce what you’re paying each month.

A DRO costs £90 (a court fee). Bankruptcy involves court fees (roughly £130-£680 depending on the route) plus potential costs if you have assets to liquidate. Some of these can be waived if you’re in genuine hardship.

How long does each option take to clear your name?

A DMP ends when you’ve paid back all your debts - typically 5-10+ years depending on how much you owe and how much you can afford to pay. During that time, you’re in active debt repayment, though creditors have stopped aggressive collection.

An IVA typically lasts 5-6 years. On completion, debts are written off and the legal arrangement ends. Your credit file continues to show the IVA history for six years from when it started (so up to 11-12 years total), but the active obligation is finished after 5-6 years.

A DRO lasts three years. After that, qualifying debts are written off and the DRO ends. Your credit file shows it for six years from start, but the active restriction is only three years.

Bankruptcy typically lasts 12 months. Once discharged, you’re freed from the debts. The bankruptcy notation stays on your credit file for six years, but the legal status is resolved after 12 months.

Where Mona Fits

Mona helps you understand and compare borrowing options so you can avoid reaching these formal solutions in the first place. But if you do face serious debt, knowing the differences between DMP, IVA, and bankruptcy is crucial. Mona can’t arrange these - you’ll need free debt advice - but understanding your options helps you make informed decisions about your financial future.

The Bottom Line

A Debt Management Plan is negotiation: you propose reduced payments and creditors usually accept it. An IVA is a formal legal agreement where you commit to fixed payments over 5-6 years and remaining debt is written off. Bankruptcy is full legal discharge but with more severe consequences. Each affects your credit file for six years, but they offer different paths to recovery. If you’re drowning in debt, get free advice from StepChange or Citizens Advice - they’ll help you understand which option is genuinely right for your situation.

Don’t attempt these alone - speak to a free debt adviser before deciding.

For free debt advice, contact StepChange (stepchange.org) or Citizens Advice (citizensadvice.org.uk). For information on formal insolvency options, visit MoneyHelper.org.uk.

Join Mona’s early access waitlist

Join the waitlist

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