Debt Management Programs and Consumer Proposals are options for all Canadians facing financial difficulties and struggling to repay their debts. While both options offer debt relief, they differ in how they work and the benefits they offer.
A Debt Management Program (also referred to as a DMP or credit counselling) is a repayment plan between an you and your creditors. The program requires you to make a monthly payment to a credit counselling agency, which in turn pays the creditors on behalf of the individual. The goal of the DMP is to reduce the interest and fees associated with the debts allowing the individual to repay their debts in full over a period of time, usually three to five years.
On the other hand, a Consumer Proposal is a legal process that allows individuals to negotiate with their creditors to repay a portion of their debts and have the remainder of their debts forgiven. A Consumer Proposal is an alternative to bankruptcy and is made through a licensed Insolvency Trustee.
When deciding between Debt Management Programs or Consumer Proposals, it’s important to consider the amount of debt one has, the monthly payment they can afford, and the impact on their credit score. Each program will have its pros and cons and these should be taken into consideration when making the decision.
If an individual has a low amount of debt and can afford to make their monthly payments, a Debt Management Program may be a better option as it allows them to repay their debts in full and has a less negative impact on their credit score.
To learn more about a Debt Management Program, or a Consumer Proposal, simply click on the live chat icon below or book your free, no obligation, consultation through our online booking system.
We look forward to helping you become debt free.