Debt Options Guide
Credit Counselling and Debt Management Plans
Updated
A debt management plan (DMP) is an informal arrangement set up by a credit counselling agency: you make one monthly payment to the agency, which pays your creditors. You repay the full principal, and participating creditors may reduce or waive interest. It is voluntary — creditors don't have to agree — and it does not legally stop collections the way a consumer proposal does.
How to choose a credit counsellor
- Prefer non-profit agencies and ask about every fee in writing before signing
- Be wary of anyone guaranteeing a specific reduction or asking for large up-front fees
- A credit counsellor cannot file a consumer proposal — only a Licensed Insolvency Trustee can
DMP vs consumer proposal
A DMP suits people who can repay their full debt within a few years if interest stops. If you can't repay the principal, or a creditor refuses to join the plan, a consumer proposal binds all unsecured creditors once accepted and reduces the balance itself.
Free tools
Related guides
- Consumer Proposal in Canada: How It WorksHow a consumer proposal works in Canada: who qualifies, the $250,000 limit, the 5-year maximum, the creditor vote, credit impact and what it costs.
- Debt Consolidation Loan vs Consumer ProposalShould you take a debt consolidation loan or file a consumer proposal? Compare total cost, credit requirements, credit impact and risk in Canada.
- Debt Settlement in CanadaHow to negotiate a debt settlement with a creditor or collection agency in Canada, how to protect yourself in writing, and the risks of for-profit debt settlement companies.
Sources
DebtDefender is an independent information site, not a Licensed Insolvency Trustee or law firm. This guide is general information, not advice for your situation. See our disclaimer.