What is a Debt Management Plan?
Who should consider filing a DMP?
What is the difference between a DMP and a Consumer Proposal?
How are my payments calculated in a Debt Management Plan?
What is a Debt Management Plan?
A debt management plan is an informal arrangement made between yourself and your creditors negotiated by a credit counsellor.
Who should consider filing a DMP?
- Individuals who are not insolvent (ie: assets>liabilities)
- Those with a relatively small amount of debt
What is the difference between a DMP and a Consumer Proposal?
Consumer Proposal:
- Formal legislated process forces creditors to participate
- Stops all interest charges
- Allows for compromise of debt so you can payback less than amount owed
- Stops wage garnishment
- You must be insolvent to file
- Results in R7 credit rating which remains on credit report for 3 years after paid in full
DMP:
- Informal arrangement between credit counsellor and creditors
- Does not stop all interest charges
- Pays back 100% of balance owed plus admin charge
- Does not stop wage garnishment
- Both solvent and insolvent individuals may file
- Results in R7 credit rating which remains on credit report for 3 years after paid in full
How are my payments calculated in a Debt Management Plan?
- Take the total amount you owe, add a 10% administration charge, and divide that amount by 48 months
- Example: if you owed $10,000 your monthly payments would be approximately $229.00 for 48 months
If I can make payments to my creditors but not in the amount required by the DMP what are my other options?
- Consider making a consumer proposal: a formal action under the Bankruptcy and Insolvency Act. Read about Consumer Proposals here
